Lords Sitting of 2 December 1991

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.

British Shipping: Government Support
Lord Murray of Epping Forest Lord Murray of Epping Forest asked Her Majesty's Government:
What recent consultations they have had with representatives of the shipping industry concerning the plight of that industry and the call for government action to strengthen it.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, we have regular contact with shipping industry representatives on a wide range of subjects of mutual interest.
Lord Murray of Epping Forest: My Lords, I thank the Minister for that reply. In the course of the contacts he has referred to, will he bear in mind the statement made by his honourable friend the Financial Secretary to the Treasury on 16th July this year when he stated that careful consideration is being given to an up-to-date study of shipping requirements that is being produced? Will the Minister say when a statement can be expected on the outcome of the Government's consultations and of the study?
Lord Brabazon of Tara: My Lords, I am aware of that statement made by my honourable friend which was made during the passage of the Finance Bill. We hope to make an announcement on that subject as soon as possible but I cannot say more than that today.
Lord Mellish: My Lords, if the shipping industry is in the same state as the building and construction industry, it must be in a plight. It is not good enough
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for the Minister to say that the Government are holding discussions with various groups. We appreciate that, but will the Minister tell us what the shipping industry is entitled to expect from the Government, given the fact that the recession is supposed to be ending?
Lord Brabazon of Tara: My Lords, I said that the Government have regular contact with the shipping industry because that was the answer to the Question the noble Lord, Lord Murray, asked. I acknowledge that the British-owned shipping industry has suffered, not just during this present recession but over many years. However, the Government continue to believe that the shipping industry makes a valuable contribution to the economy. We recognise that ships are needed both for economic reasons and for defence.
Lord Greenway: My Lords, is it not time that we stopped crying about the demise of the British flag and looked instead at the total tonnage of British controlled shipping, which represents a much larger total? Should we not be thankful that, with the great reorganisation that is taking place in world container shipping at the moment, we still have very much a front runner in the shape of P&O?
Lord Brabazon of Tara: My Lords, I endorse what the noble Lord says. Although it is reduced in size and changed in nature, the British fleet remains a significant one. The UK-owned fleet, which the noble Lord mentioned, is over 50 per cent. larger in number, and in tonnage terms is more than treble the size of the British flag fleet. Much of the latter fleet is registered on other British flag registers.
Lord Bruce of Donington: My Lords, we have learnt from the Minister that the Government are aware of the plight of the shipping industry. Will the Minister go a little further and indicate to the House what the Government propose to do to alleviate the industry's plight?
Lord Brabazon of Tara: My Lords, over the years we have taken a number of measures to increase the

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prosperity of the shipping industry. Under the terms of the Merchant Shipping Act 1988 the Government initiated a scheme to help with training and crew relief costs. Those measures have been successful. The shipping industry benefits from the 25 per cent. depreciation allowance and reductions in corporation tax.
Lord Molloy: My Lords, does not the Minister agree that the shipbuilding and ship repair industries are inextricably linked with the defence of this country? A factor that is causing some anxiety is the drop in the number of apprentices recruited to those industries.
Lord Brabazon of Tara: My Lords, the two industries that the noble Lord has mentioned are rather different from the shipping industry that is the subject of the Question on the Order Paper.
The Earl of Clanwilliam: My Lords, in the light of the report researched by Warwick University calling for 10,000 additional Merchant Navy officers to be trained in the next decade, will my noble friend advise the House of the actions of his department to match that need?
Lord Brabazon of Tara: My Lords, as I mentioned a moment ago we have started to offer assistance for training. The Government assist with 50 per cent. of the cost of training British merchant officer cadets. That scheme has been successful. Since the scheme began recruitment has increased from 162 recruits in 1987 to 525 last year.
Lord Clinton-Davis: My Lords, does the Minister agree with his noble friend Lord Sterling of Plaistow—I perceive that the noble Lord, Lord Sterling, will ask a question in a moment—who has said that we cannot pretend that the British fleet is other than in decline, or does the Minister pretend otherwise? The British shipping industry is one of the oldest shipping industries in the European Community. Over the past 12 years the Government have presided over the steepest decline in the British merchant fleet in comparison with the state of affairs that pertains with all our competitors. When will the Minister do something drastic to arrest that situation?
Lord Brabazon of Tara: My Lords, my noble friend Lord Sterling can no doubt speak for himself. I have already outlined various measures which the Government have taken. We also look for progress to be made on the European front.
Lord Sterling of Plaistow: My Lords, does my noble friend agree that, apart from the shipping industry's economic contribution of well over £5 billion a year, which makes it a very important part of the economy, any government which do not recognise its worth in defence terms do so at their peril? Does he also agree that without rebuilding the fleet and without training British seafarers we shall not have that defence force? Will he not also agree that whoever prefers to depend
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on NATO staying together and therefore being dependent on a European defence combination again does so at his peril?
Lord Brabazon of Tara: My Lords, we certainly recognise the contribution made by the Merchant Navy in times of crisis. Fleet and manning levels are constantly monitored. We are currently studying our likely shipping requirements in times of conflict and the options for meeting those requirements. As I said earlier, we hope to make an announcement on that subject as soon as possible.
Lord Murray of Epping Forest: My Lords, does the Minister recognise that these exchanges have illustrated the wide-ranging implications of the demise of our fleet? At an appropriate time will he consider the possibility of convening a high level, round table conference of representatives of shipowners, unions, marine insurers, financial interests and the Royal Navy in order to work out a national solution to this national problem?
Lord Brabazon of Tara: My Lords, we have only very recently published, jointly with the shipping industry, the joint working party report. That report outlined many of the issues which have been raised in your Lordships' House this afternoon and made a number of recommendations, which are in hand, for putting those measures in place.

Concorde
2.44 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What action they are taking to secure the introduction of a successor to Concorde.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): My Lords, the Government believe that industry should take the lead in defining the need for such an aircraft and in securing its introduction. Although government support is already being provided for research into basic technologies, many of which are relevant to supersonic transport, it is too early to say what direct part, if any, government might play in the evolution of such a project.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that not very precise Answer. Is he aware that it is now 15 years since I gave Concorde her certificate of airworthiness and that a period of that duration without a successor aircraft even being in sight is unique in the history of the civil aviation industry? Does he realise that supersonic aircraft such as Concorde are a very important part of Britain's civil air fleet?
Lord Reay: My Lords, I acknowledge my noble friend's great experience in these matters. It is not possible to give a precise answer because it is not possible to foresee the future clearly. We believe that it is up to the aviation industry and not to government to decide on the future strategy of the industry and to

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decide whether or not a particular project is viable. We do not believe that we should second guess industry or support prestige programmes which have no commercial justification.
Lord Mason of Barnsley: My Lords, can the Minister explain to the House to what extent Concorde has proved a commercial and financial success? Can he also say which country has benefited most, if at all—France or the United Kingdom?
Lord Reay: My Lords, it is my understanding that Concorde has been a commercial success for the airlines which operate it. However they did not have to pay the development costs. Those amounted to £880 million net and resulted in the sale of only 14 aircraft. That translates into £4.6 billion at present day prices.
Lord Wyatt of Weeford: My Lords, will the noble Lord ensure that all the development costs of any second Concorde, so far as they are provided by the Government, are taken into account in considering its commercial viability and that we avoid repeating the financial disaster of the first Concorde?
Lord Reay: My Lords, the Government believe that such projects must be justified commercially and be initiated by industry.
Lord Ezra: My Lords, would it not be unfortunate if Britain and France, having pioneered this new form of aircraft and having spent the moneys to which the noble Lord referred, nevertheless left it to others to develop further aircraft in the series? Would that not be a further illustration of the way in which we seem to pioneer new developments and then leave it to others to benefit from them? Would it not therefore be desirable for a major effort to be made on the lines of the initial Question of the noble Lord, Lord Boyd-Carpenter, and for us to concert our efforts with our French friends in order to maintain our lead in this area?
Lord Reay: My Lords, I am not sure that the noble Lord has given a fair picture of the situation. Any successor to Concorde is certain to be an international project. Secondly, a considerable amount of activity is taking place involving British industry. For example, British Aerospace is involved with Boeing, Aerospatiale, Deutsche Aerospace, McDonnell Douglas, Tupolev, Alenia of Italy and JADC of Japan in a group which is studying the viability of further supersonic transport aircraft. I should add that Rolls-Royce and SNECMA are also working together on the aero-engine aspects of such a project.
Lord Dean of Beswick: My Lords, in his reply to the first Question of the noble Lord, Lord Boyd-Carpenter, the Minister implied that the Government were looking to the private sector and private capital to fund a successor aircraft. Bearing in mind the enormous costs of producing such an aircraft, does the Minister not agree that if the Government adopt that stance there will be no successor? Does he agree that both this Government and the French Government will have to be involved financially if such a successor, which is so necessary, is to be produced? Because of
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the necessary technology governments will have to be involved and must not stand aside and let such a project fall.
Lord Reay: My Lords, as I tried to indicate, we believe that it is up to industry to come forward with a commercially and industrially justifiable project. If it does so, government support for a specific project of that kind might be considered.
Lord Boyd-Carpenter: My Lords, does my noble friend's repeated suggestion that it is a matter for industry only show that the Government do not appreciate the enormous build-up in the prestige of the British civil aviation industry and of British technology generally to which Concorde, with its great success, has given rise? Will he not at least pay tribute to that?
Lord Reay: Yes, my Lords. I recognise that technically Concorde has been a major success, but I have emphasised that overall its commercial position is doubtful. I agree with my noble friend that it has played a flagship role through the airlines which operate it and that it has brought them prestige, but any future project must be commercially justifiable.
Lord Clinton-Davis: My Lords, although I sympathise with the Minister when he says that the Government cannot see the future clearly—that is what he said—will he give rather greater sympathetic consideration to the suggestion of his noble friend Lord Boyd-Carpenter; namely, that there is a case for the Government being pro-active alongside industry in making sure that technological innovation of that kind can be pursued? Will he also assure the House that, in the event of such a project being pursued, the Government will, over the next six months—because that is all they will last—be prepared to give an undertaking that they will not commit the crass error made by the Conservative Government of the 1960s in not ensuring that there was a break clause in the agreement with the French with regard to the production of Concorde?
Lord Reay: My Lords, the Government are doing a great deal for the aerospace industry. For example, over the past 10 years, they have provided over £970 million of launch aid for the development of new aircraft and aeroengines. We also support research under the civil aircraft research and demonstration programme into several basic technologies which might be of value to future supersonic programmes. One of those of particular relevance to supersonic transport projects is work under the CARAD programme on advanced aluminium alloys, including alloys reinforced with ceramics.
Lord Hailsham of Saint Marylebone: My Lords, can we not look to the Front Benches to set an example to us poor others by avoiding the sillier forms of party persiflage?
Lord Reay: My Lords, on this side of the House we try to do so.

Leadenham Bypass
2.53 p.m.
Baroness Strange Baroness Strange asked Her Majesty's Government:
Why they now propose to hold a second public inquiry into the route of the Leadenham bypass.
Lord Brabazon of Tara: My Lords, the original orders that would enable the bypass to be built were quashed in the High Court. It was therefore necessary to publish new draft orders to obtain statutory authority to construct a bypass of Leadenham. These have attracted a number of objections that cannot be resolved other than by holding another public inquiry.
Baroness Strange: My Lords, I thank my noble friend for his extremely courteous and also extremely discouraging reply. Is he not aware that it was the opinion of my honourable friend the Minister of State for Foreign Affairs that a northern route would be preferable? Is he not further aware that to hold a second public inquiry overturning the result of the first must surely be a waste of public money?
Lord Brabazon of Tara: My Lords, I was not aware that my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs had pronounced upon the merits or otherwise of the particular route involved in this bypass. However, there is to be another public inquiry and the cost will be in addition to that which has already been incurred. As I have outlined, it is necessary.
Baroness Nicol: My Lords, is it not the case that the inspector at the first inquiry found very firmly in favour of the northern route on environmental grounds? I understand that he said that in this case, when economic and environmental considerations were weighed, the environmental factors should take precedence. In view of the fact that the southern route has been opposed by the CPRE, English Heritage and the Countryside Commission as well as by local residents, why are the new orders being published for that route?
Lord Brabazon of Tara: My Lords, it is for the Secretaries of State for the Environment and Transport jointly to take the final decision and bear responsibility for it, taking into account all material considerations, including the inspector's recommendations. They are of course answerable to Parliament for the decision. As to the noble Baroness's statement that some people are in favour of the northern route, I should point out that others are in favour of the southern route.
Baroness Gardner of Parkes: My Lords, perhaps the Minister will accept that there is some slight confusion here. When he replied, he referred to the Secretary of State for Foreign and Commonwealth Affairs, but my noble friend Lady Strange referred to the Minister of State at the Foreign and Commonwealth Office. I understand him to be the Member for the constituency of Grantham, to which this Question applies. It would be a pity if Hansard
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recorded the matter wrongly. Will my noble friend tell me whether it is possible that, in view of the fact that the original orders have been quashed by the High Court, the second public inquiry might come out with the same result as the first public inquiry?
Lord Brabazon of Tara: My Lords, I am happy to put the matter right if my noble friend referred to the Minister of State at the Foreign and Commonwealth Office. If that is the case, it must be right. It is possible that the second public inquiry might come to the same conclusion as the first.
Lord Underhill: My Lords, is it not the case that the southern route was supported by the overwhelming majority of the 400 inhabitants of the village of Leadenham; that the main objection came from an individual who owned most of the land in the village; and that the second inquiry will go into the question of the land? I note the fact that the court of inquiry praised the department for the attention that it paid to both the economy and the environment. Is the Minister thoroughly content that there was a satisfactory environmental assessment in this matter?
Lord Brabazon of Tara: My Lords, I am grateful to the noble Lord for putting forward the case for the southern route, which is the route chosen by the department. I can assure him that an environmental impact assessment has been done and will be presented again to all those involved in the second public inquiry.

Driving Licence Renewals for 70 Year- Olds
2.58 p.m.
Baroness Fisher of Rednal Baroness Fisher of Rednal asked Her Majesty's Government:
Why they have introduced a charge to those over 70 years old, including the disabled, for the three-year renewal of their driving licences.
Lord Brabazon of Tara: My Lords, changes in the fees are necessary because the driving licensing system is required to be self-financing. The number of 17 year-olds who apply for the first provisional licences, and provide the main source of income under the present system, has steadily decreased over the past three years and is projected to go on doing so for some time to come, while the number of 70 year-olds has increased.
Drivers aged 70 and over issued with licences for periods of one or two years, for medical reasons, will pay the renewal fee only every three years. Any necessary medical investigations remain free of charge to the driver.
Baroness Fisher of Rednal: My Lords, I thank the noble Lord for that reply. According to the licence application form, the medical renewal is still free for the under-70s and costs £6 for the over-70s. Does that not show discrimination against age? Will the

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Minister tell us how much money the charge to old-age pensioners of 70 or over will raise to cover the deficit to which he referred?
Lord Brabazon of Tara: My Lords, as I indicated in my original Answer, the problem is that there is an ageing population in this country. Over the past four years over quarter of a million more people aged 70 or over have applied for licences, whereas the number of 17 year-olds in the population has gone down by 17 per cent. in the past three years, and that is set to continue for at least the next five years. Therefore we felt that it was only fair to ask the over-70 age group at least to pay something towards renewing their licences. We expect income from that group to be approximately £3.3 million.
Lord Mellish: My Lords, I declare a public interest; I am over 70. I shall apply for a renewal licence next February. Do I understand from the Minister that I have to pay for the privilege of having a licence? I have had a car for about 50 years—though of course it is not the same car—and I have been driving for about 50 years. Would it not be better for the Minister to say to those over 70—that includes most Members of this House—"If you drive you pay"?
Lord Brabazon of Tara: My Lords, I realise that the age profile in this House may not be typical in relation to the rest of the country. I regret to have to tell the noble Lord that from next February, yes, he will have to pay £6 to renew his driving licence for three years. That works out at £2 a year, which is rather less than the price of a gallon of petrol.
Lord Hailsham of Saint Marylebone: My Lords, will ray noble friend explain the logic of the system? While I accept that the system must pay for itself, why, because there are more 70-plus year-olds and fewer 17 year-olds, should the 70 year-olds pay a higher fee? Should the fee not be spread population-wide?
Lord Brabazon of Tara: My Lords, 17 year-olds' fees are also increasing from £17 to £21 at the same time. In other words, they will pay a great deal more than 70 year-olds. Had 70 year-olds not had to pay anything, the 17 year-olds would have had to pay about £25. As a result of the decrease in the number of 17 year-olds, they would have to pay about £30 in two years' time.
Baroness Seear: My Lords, the Minister refers to 17 year-olds and 70 year-olds. Why pick on us?
Lord Brabazon of Tara: My Lords, because until the age of 70 one keeps the same licence. One pays once for a licence which lasts until the age of 70. After the age of 70 one has to renew one's licence every three years
Lord Underhill: My Lords, as one aged 77, I declare an interest in this Question. However, does the matter arise because driver and vehicle licensing was transferred to an agency whose sole interest, frankly, is revenue? Is that a matter of which we should take notice? We understand that a large number of organisations were consulted. Will the Minister state the nature of the organisations and the results from
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the consultations? Is it not strange that little publicity has been given to the matter? I usually keep a thorough record of communications from the Department of Transport. In this case a press notice was issued; and little attention seems to have been paid to it.
Lord Brabazon of Tara: My Lords, I assure the noble Lord that it is not because the DVLA has become an agency. Since 1980 the DVLA has been obliged to balance its books, if I may so express it. Last year there was a shortfall of, I believe, about £5 million. Therefore it was essential to make some adjustments to the fees. That is why the fees that I have outlined will come into force next February.
With regard to publicity, in April of this year the department issued a press notice proposing the new fees. A consultation period followed in which 150 organisations were sent the consultation paper. Only 17 written responses were received. We published the result of that consultation in September by way of another press notice.
Lord Ezra: My Lords, will the noble Lord agree that it is one of the most extraordinary propositions that has ever come before the House? Are we unique among European countries in adding to the charges for older people?
Lord Brabazon of Tara: My Lords, I believe that it is an issue on which we may be able to make up our own minds, whatever they may do elsewhere in Europe. One ought to put the matter into perspective. Instead of those who renew their licences at the age of 70 for three years obtaining the licence free, they will have to pay £6. That is just £2 a year.
Baroness Fisher of Rednal: My Lords, one appreciates what the noble Lord said about balancing the books. However, does he agree that the same agency raised several millions of pounds by selling cherished number plates? It is now already advertising the new list of cherished number plates. Could such sales not have saved the money of the old-age pensioners?
Lord Brabazon of Tara: My Lords, certainly money has been raised by the sale of number plates. However, the issue of driver licences is a separate matter. That body has to balance its books on its own.
Lord Underhill: My Lords, the noble Lord referred to the charge of £6 at the age of 70. Is it not made quite clear in the press release on 3rd September that that applies not only to those who reach the age of 70 but to each time one renews the licence? I am now 77. Therefore I should have had to pay three times.
Lord Brabazon of Tara: My Lords, it would be only once every three years.
The Countess of Mar: My Lords, how does the DVLA reconcile the charges? A person of 17 receives 53 years-worth of licence for under 50p a year while someone over 70—and I support my noble friends who are over 70—has to pay £6, which is £2 a year.
Lord Brabazon of Tara: My Lords, it is because up to the age of 70 drivers do not have to renew their licence whereas at the age of 70 they do.

Business
Lord Hesketh: My Lords, it may be for the convenience of the House to know that the Committee stage of the Local Government Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the Merchant Shipping (Prevention of Oil Pollution) (Amendment) Order 1991 and the Building Societies Act 1986 (Modifications) (No. 2) Order 1991 will be taken.

Local Government Bill [H.L.]
3.7 p.m.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Blatch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Baroness Serota in the Chair.]
Clause 1 [Publication of information as to standards of performance]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 1:
Page 1, line 8, at beginning insert ("Subject to subsection (1A) below").
The noble Lord said: I always enjoy this spot. I speak very slowly and allow noble Lords to leave in comfort. If I give Members in the Chamber the warning that I am about to make a long, boring speech on quality assurance and customer contracts perhaps more noble Lords would care to leave.
Baroness Faithfull: We are staying.
Lord McIntosh of Haringey: I would never have included the noble Baroness in my wish for the Benches opposite to be empty.
In moving Amendment No. 1, I speak also to Amendments Nos. 2, 10 and 26. Amendment No. 26 is the most significant amendment of the four. The others in effect are paving amendments.
I yield to no one in my respect for the Audit Commission and I am particularly grateful that in the past few days I have received a letter from the Comptroller of the Audit Commission, Mr. Howard Davies in which he has been able to bring me up to date on the publications of the Audit Commission over recent years and to set out the views of the Audit Commission on the Government's proposals. I say immediately that they are favourable. I repeat what I said on the subject at Second Reading. We wish to support the Bill. We believe that the provision of Citizen's Charter safeguards for the people of this country in respect of local government services is a
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valuable and worthwhile improvement. But of course we wish to support the Bill by ensuring that it is the best possible provision.
As I said on Second Reading, the history of Citizen's Charter provisions for local government is ancient and respectable. I quoted from Herbert Morrison who in 1921 published a pamphlet on the subject. Since then the question of how to measure quality in local government services, as in any private manufacturing or service industry, has received a great deal of well-informed and imaginative discussion. The Audit Commission has not been behind in its publications.
I shall do no more than refer to the most important characteristics of the debate, otherwise this could be a long and boring speech. It is important to distinguish between the dimensions of quality and the ways in which we are able to measure quality. The two are not necessarily the same. It is relatively simple for us to identify the dimensions of quality of service. It is obvious that they will be the costs; the resources provided and the costs of those resources; the output as measured in perhaps crude terms of quantity of service provided; and the outcome which is a simplified way of referring to the quality of the service provided and its value to the consumer. The latter part is the most difficult.
If we are to make these dimensions operational—if we are to distinguish between the service of one local authority and another—we must go a little further. We must provide performance indicators which, in effect, are ratios between the dimensions that I have described. "Economy, efficiency and effectiveness", is the phrase used in the Bill and in a great deal of prior legislation. Economy is the cost of the resources required. Efficiency is the ratio between the output and the resources used. Effectiveness is the output in relation to the outcome; that is the quantity of service provided in relation to the quality. Many other criteria could be introduced. Clearly, the level of service is a significant factor. In addition, the take-up of the service is a significant criterion where a service is offered to local people instead of being provided on a universal basis.
All those aspects begin with relatively intangible dimensions and they attempt to relate one intangible dimension to another. That is extremely difficult. The Audit Commission rightly points out the danger that Gresham's law might apply to quality measurement; that is, that the measurable changes might drive out the unmeasurable. Perhaps I might cite the drunk looking for his keys under the lamp-post. On being asked why he was looking there he said, "I didn't drop them here but the light is better here". That is the danger that will arise if we apply measures that are too crude.
I welcome the statement made by Mr. Davies in a letter to me last week. He stated that it is not the role of the Audit Commission to set standards but rather to specify how they should be measured. He also pointed out the need to avoid distorting service provision through the measurement process. In tabling the amendments I wish to suggest that with the best of intentions the Government are going about the

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provisions the wrong way. They are looking at the whole issue of the Citizen's Charter as being between central Government and their agency; that is, the Audit Commission and in Scotland the Scottish Accounts Commission. We would prefer to look at the issue as a contract between a local authority and the citizens living in its area. We believe that to be missing from the Government's whole approach to Clauses 1 to 7 of the Bill.
For that reason Amendment No. 26 spells out the guidance which the Audit Commission and the Scottish Accounts Commission should give to local authorities as regards the establishment of customer contracts within the meaning of the clause. Unlike anything so far proposed by the Government, a customer contract is drawn up and published by a local authority. It specifies the standards of service; the opening and closing times of offices; the means by which residents may obtain or secure services; the means by which services are to be provided to or for residents—I apologise for the legal wording but it is necessary—targets as to response times; the unit cost of each of the main services identified; and the way in which residents may make complaints about the quality of service if they are not satisfied.
There are plenty of examples. In front of me I have some from Islington and Stockton but there are many more. I understand that 250 local authorities voluntarily joined with the Audit Commission in a quality exchange, which is a starting point towards this approach to quality management. However, it is important not merely that information should be published as a result of directions from the Audit Commission to the local authority and made available to interested persons, as the Bill proposes, but also that the residents should be involved from the beginning. A clear contract should be made in advance, including sanctions if it is not adhered to by the local authority.
That is what we say in our approach to the issue. It is a more realistic, practical and forward-looking approach than that which the Government are taking. I hope that the Committee will see fit to approve the amendment. I beg to move.
3.15 p.m.
Baroness Hamwee: I support the amendment. I too have admiration for the work of the Audit Commission. I have been privileged to chair a performance review committee in my local authority. That proved to be a fascinating and worthwhile exercise. I am worried that as a result of well-intentioned legislation we shall be imposing on our local authorities the dead hand of uniformity. We must always allow the reflection of local choice and circumstances. The most important performance indicator is that of client satisfaction, although that is not easily obtained. I too wish to speak to the most important amendment in this group—Amendment No. 26—with regard to the establishment of customer contracts.
The legislative specification for a customer contract cannot be entirely complete. There are additional criteria which every local authority will wish to
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identify in order to make its contract more applicable and appropriate. For example, there is decentralisation enabling services to be delivered at the most local level and consultation enabling communities to contribute to the process rather than merely having things done to them. I use the two buzz words. The contract appears to fit well into this part of the Bill, which is headed by a reference to the Citizen's Charter. The charter should give citizens rights, and a contract is a personal way of allowing rights to be exercised and enforced. Members of the Committee may believe that the introduction of customer contracts will require the establishment of elaborate machinery. Therefore, I shall give an example from a local authority of the ADUR. A couple of years ago it agreed to reimburse its residents £5 each time a rubbish bin was not collected. In the first year it had to reimburse only £210. No doubt the customer contract made the authority deliver the service better and it turned out not to be the draconian measure that might have been feared.
In Tower Hamlets there is a different type of customer contract. There is a service guarantee. When residents go into one of its one-stop shops there is a guarantee that they will receive a response to their inquiries within three days. If a complaint or inquiry is not dealt with fully within two weeks—and this is not a financial recompense —a senior officer will intervene. I suggest that that is a mechanism for concentrating the minds of junior officers.
I support what is not a measure of uniformity but what is a means of allowing local authorities to draw up contracts appropriate to their own communities.
Baroness Blatch: I feel a certain sympathy towards these amendments. After all, as has been mentioned, Amendment No. 26 introduces what are called customer contracts, which contain many of the customer friendly features that we are committed to establishing in the departments of government, privatised utilities and in local government, as set out in The Citizen's Charter White Paper.
However, the good intentions behind them should not blind the Committee to the fact that the manner of achieving those desirable ends, as provided under Amendment No. 26, is a typical piece of Labour Party bureaucracy. The intention of this group of amendments is to pave the way for customer contracts —a good idea in theory but almost impossible in practice.
Amendment No. 26 attempts to set out the content of such contracts but the idea of a customer contract is not amenable to legislation in this way; an opinion which can be justified by consideration of the difficulties of just one paragraph. I ask the Committee to consider subsection (2) (iii) of Amendment No. 26 which reads:
"the means by which residents may obtain or secure services".
It would be necessary to define "residents". Does that cover those people who dwell in a particular type of accommodation, those who live in the area of a local authority, or the local electors? For some services it would be necessary to specify means unless it is suggested that it is necessary to spell out, for example,

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"by ringing 999" or "by attending school" and so on. The essential point is that it is simply not sensible to define a customer contract in legislation.
There is another reason for rejecting this group of proposals. The effect of Amendments Nos. 1, 2 and 10 would be to remove any service which was the subject of a customer contract from the publishing requirements in Clause 1(1). Therein lies the rub. That would mean that local authorities would not be required to report the facts of what had been achieved and the costs incurred. It would be necessary merely to promise the intended achievements, no doubt with the best of intentions, and what it is hoped would be the cost. When judging performance, intention and hope are never as good a measure as fact.
These proposals will allow local authorities to escape another hard factual measure. By signing up to promises local authorities would escape the comparisons of performance which the Audit Commission or the Scottish Accounts Commission would make under the powers provided by Clause 3. Thus, the public would be deprived of the unbiased analysis of local authority performance which the proposals are designed to achieve.
However, the principal objection to the proposals is that they would give rise to needless, useless and unworkable bureaucracy. I ask the Committee to reject this ill-thought out and, I believe, misguided proposal.
Lord McIntosh of Haringey: I believe that the Minister has been involved more recently than I in local government. It is over nine years since my involvement but I believe she has lost touch with what has been happening on the ground over the past few years. If she believes that the amendments introduce an element of additional bureaucracy, she cannot have read them properly.
Amendment No. 26 provides that the Audit Commission shall issue guidance for local authorities as to the establishment of customer contracts within the meaning of the clause. As the Minister rightly says, it then provides that where customer contracts have been drawn up in accordance with the guidance, some of the more rigid bureaucratic procedures proposed elsewhere in the Bill will no longer become necessary.
The customer contracts are precise and provide the protection for residents. I have only one or two in front of me but my noble friend Lady Hollis has 150 which she threatens to produce. The customer contract for the Beech Wood Road area of Thornaby in Stockton-on-Tees Borough Council specifies precisely who are the residents. There is a map of the streets covered by the customer contract. As regards street cleaning, it specifies the day of sweeping, the type of sweeping and the day of the refuse collection. It specifies exactly what should be done, right down to the closing of the gate after the completion of the refuse collection. That is close to people and is exactly what local authorities should do and what many local authorities —not only Labour authorities—are doing now.
We propose that some of the unnecessary bureaucracy among central government, the Audit
16
Commission and local authorities should be avoided. In substitution for that, there should be a direct, clear, publicised contract between a local authority and groups of its residents in adequately defined areas.
I should have thought that that is the reverse of the amendment which the Minister seemed to describe in her reply. What we propose is eminently practical, sensible and would be understood by local people to be a true guarantee of the service which they are entitled to expect from local authorities. I am sorry that the matter was responded to in that way. It is not a particularly partisan or controversial point. It is intended, as are so many of our amendments, to be helpful. It is better that we establish the way in which we are to proceed so that we make it clear that we shall not accept such replies. Therefore, I seek the opinion of the Committee on the amendment.
3.27 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 121.

Division No. 1

CONTENTS

Ailesbury, M.

Listowel, E.

Annan, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Longford, E.

Bonham-Carter, L.

Lytton, E.

Bottomley, L.

McIntosh of Haringey, L.

Broadbridge, L.

Mar, C.

Brooks of Tremorfa, L.

Mason, of Barnsley, L.

Bruce of Donington, L.

Mayhew, L.

Carmichael of Kelvingrove, L.

Mishcon, L.

Cledwyn of Penrhos, L.

Molloy, L.

Clinton-Davis, L.

Morris of Castle Morris, L.

Cocks of Hartcliffe, L.

Murray of Epping Forest, L.

David, B.

Nicol, B.

Dean of Beswick, L.

Peston, L.

Desai, L.

Porritt, L.

Donaldson of Kingsbridge, L.

Redesdale, L.

Dormand of Easington, L.

Richard, L.

Ennals, L.

Robson of Kiddington, B.

Ezra, L.

Rochester, L.

Fisher of Rednal, B.

Sainsbury, L.

Fitt, L.

Salisbury, Bp.

Gallacher, L.

Seear, B.

Galpern, L.

Serota, B.

Gladwyn, L.

Shackleton, L.

Graham of Edmonton, L. [Teller.]

Shaughnessy, L.

Shepherd, L.

Hampton, L.

Stallard, L.

Hamwee, B.

Stedman, B.

Hanworth, V.

Stoddart of Swindon, L.

Hilton of Eggardon, B.

Strabolgi, L.

Hollis of Heigham, B.

Taylor of Blackburn, L.

Hooson, L.

Tordoff, L. [Teller.]

Hylton-Foster, B.

Underhill, L.

Kennet, L.

Wallace of Coslany, L.

Kinloss, Ly.

White, B.

Leatherland, L.

Winchilsea and Nottingham, E.

NOT-CONTENTS

Alexander of Tunis, E.

Belstead, L.

Allenby of Megiddo, V.

Blanch, L.

Arran, E.

Blatch, B.

Astor, V.

Blyth, L.

Atholl, D.

Borthwick, L.

Auckland, L.

Boyd-Carpenter, L.

Balfour, E.

Brabazon of Tara, L.

Barber, L.

Brougham and Vaux, L.

Bauer, L.

Butterworth, L.

Belhaven and Stenton, L.

Campbell of Alloway, L.

Beloff, L.

Campbell of Croy, L.

17

Carnock, L.

Macleod of Borve, B.

Cavendish of Furness, L.

Macpherson of Drumochter, L.

Cayzer, L.

Malmesbury, E.

Clanwilliam, E.

Mancroft, L.

Clitheroe, L.

Manton, L.

Cockfield, L.

Marsh, L.

Colnbrook, L.

Masham of Ilton, B.

Constantine of Stanmore, L.

Merrivale, L.

Cottesloe, L.

Mills, V.

Cox, B.

Milverton, L.

Cross, V.

Morris, L.

Cumberlege, B.

Mowbray and Stourton, L.

Dacre of Glanton, L.

Munster, E.

Davidson, V. [Teller.]

Nelson, E.

De Freyne, L.

Nelson of Stafford, L.

Denham, L.

Norfolk, D.

Denton of Wakefield, B.

Orkney, E.

Dudley, B.

Oxfuird, V.

Eccles of Moulton, B.

Pender, L.

Effingham, E.

Penrhyn, L.

Ellenborough, L.

Peyton of Yeovil, L.

Elles, B.

Platt of Writtle, B.

Elliot of Harwood, B.

Plummer of St. Marylebone, L.

Elliott of Morpeth, L.

Pym, L.

Faithfull, B.

Quinton, L.

Flather, B.

Rankeillour, L.

Fraser of Kilmorack, L.

Reay, L.

Gainford, L.

Renton, L.

Gardner of Parkes, B.

St. Davids, V.

Gray of Contin, L.

Selborne, E.

Gridley, L.

Shannon, E.

Grimthorpe, L.

Shrewsbury, E.

Hailsham of Saint Marylebone, L.

Skelmersdale, L.

Strathcarron, L.

Halsbury, E.

Strathmore and Kinghorne, E.

Henley, L.

Strathspey, L.

Hesketh, L. [Teller.]

Swansea, L.

Hives, L.

Swinfen, L.

Hood, V.

Terrington, L.

Howe, E.

Thomas of Gwydir, L.

Ironside, L.

Thorneycroft, L.

Jeffreys, L.

Trumpington, B.

Jenkin of Roding, L.

Ullswater, V.

Johnston of Rockport, L.

Vaux of Harrowden, L.

Killearn, L.

Vivian, L.

Kinnaird, L.

Waddington, L.

Knollys, V.

Wade of Chorlton, L.

Lauderdale, E.

Whitelaw, V.

Long, V.

Wise, L.

Mackay of Clashfern, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.35 p.m.
[Amendment No. 2 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 3:
Page 1, line 11, after ("making") insert ("(in respect of matters on which a common national standard has been prescribed by or in accordance with statutory provisions)").
The noble Lord said: In rising to move Amendment No. 3 I shall speak also to Amendments Nos. 4, 11 and 17. In introducing those amendments I can do no better than refer back to the letter from Mr. Howard Davies to which I referred in moving the last amendment. I hasten to add, in case there is any doubt about it, that it is not a private letter. There is nothing contained in it which Mr. Davies would not have been happy for the Government to see. There are no backstairs communications between myself and the Audit Commission.
As I said to the Committee when speaking to the last amendment, Mr. Davies said in his letter that it is
18
not the role of the Audit Commission to set standards—rather to specify how they should be measured. That is the thrust of these amendments.
It should be self-evident to anyone with a detailed knowledge of the way in which local government works that the standards to which local authorities wish to aspire and adhere should be established as far as possible on a local basis between them and their electors. It is the stuff of local government that when people in a local area vote they are making a judgment regarding the standards, quality and cost of the services they wish to see. Of course they wish to see that whatever level of service they specify is provided in a cost-effective and high quality way. But they want the ability to say, "No. If it is to cost that much I do not want the service". After all, it is the privilege of people living in East Sussex to say that they do not want nursery education. I believe that they are profoundly wrong and that there are many social reasons why the county council of East Sussex should provide nursery school education, which at the moment it does not do. But the local people have that privilege because that is the nature of local democracy.
The same is true where a local authority, elected on a democratic basis by the people in its area, wants to provide a higher level of service than the Government believe desirable. It should be the privilege of the local authority and those local people to specify that higher level of service and to see that it is adhered to.
Amendment No. 11, the most significant of the group, provides that local authorities,
"shall publish on an annual basis a report setting out the local standards which it has adopted in respect of each service area for the financial year concerned; an assessment of the extent to which the standards referred to … have been achieved; a summary of the results of a survey of the views of residents in the authority's area as to the local standards adopted by the authority and the performance of the authority in relation to those standards".
Many important points are contained in that wording. They are points neglected by the Government in their approach to the whole matter.
A common view exists in regard to the publication of information. We shall not be opposing the provision in the Bill regarding the publication of information, auditors' reports or, in most cases, lists of defaulters on auditors' reports. But the idea that there should be a publication every year of the actual level of service which has been contracted and the extent to which the local authority achieved that level of service is something which does not appear in the Government's proposals. The survey of the views of residents both on the level of service adopted and the performance of the local authority in achieving it is again something of importance which does not appear anywhere in the Government's proposals.
Amendment No. 11 goes on to say:
"The Audit Commission … shall, after consultation with such persons representative of local authorities … issue guidance to local authorities on the form of any report published in accordance with subsection (1A) above".
That is not simply a provision which enables local authorities to get round the provisions of any citizen's charter; far from it. It is a provision which forces local authorities to set realistic standards relating to the area that they serve, to seek to achieve those

19
standards, to report to their residents on the standards and whether they have achieved them and to seek their views. In other words, it should be a two-way process on the standards and the way in which they have been achieved.
On this occasion I hope the Minister will not rise to say that she is sympathetic to the purpose behind the amendments but she cannot accept them because of various defects in the wording. I suspect that behind her response to the last group of amendments was the fear that true negotiation on quality of service would take place between a local authority and the people living in its area rather than directly involving central government. That is what is behind so much of the Citizen's Charter. So much of it is central government saying what other people shall do and multiplying those lessons to their own services.
This is not an occasion when those defects in the Citizen's Charter should be allowed to take precedence. This is a case where it is the proper exercise of local discretion under the guidance of the Audit Commission, as we make clear in the amendment, to set out standards of service, to assess performance in respect of those standards of service and to see to it that people have some come-back if those standards of service are not achieved. I beg to move.
Baroness Blatch: I make absolutely no apology for my objections to the first amendments. I was comparing what the noble Lord was talking about; namely, aspirational contracts and intentions, as against what the Government are proposing, which is positive measurement against actual achievement by local authorities. As regards the present amendments, quite uncharacteristically the noble Lord, Lord McIntosh, displays a serious misunderstanding of what this part of the Bill is about. He says that he wants local authorities to set their own standards locally. That is precisely what the Bill sets out for them to do.
These amendments would change fundamentally the nature of the clauses. The Bill as printed requires the Audit Commission to issue directions as to the reporting of standards. Directions would set out the yardsticks against which local authority performance would be measured. They would not be prescriptive in any way; rather they would be descriptive or comparative. However, under these amendments the information which authorities would publish would also be used to assess performance against a nationally required standard. Again I emphasise that that is what these amendments are calling for—that is to say, a nationally required standard and not a locally determined one.
Amendment No. 3 would prevent the Audit Commission issuing directions unless national standards had been set. Amendment No. 17 is consequential on Amendment No. 3. Amendment No. 4 would insert the word "quality" as one of the criteria to be considered in making comparisons. The Committee will note that the directions that the Audit Commission would issue under the Bill would require comparisons to be made by reference to criteria which
20
would include effectiveness. In assessing effectiveness, the quality of service has to be taken into account. Therefore, it is unnecessary for specific reference to be made in the way proposed.
Amendment No. 11 is another example of needless bureaucracy. It is badly designed for achieving its apparent purpose. I say "needless" because two of the three items covered by subsection (1) (a) of the amendment are already provided for in the Bill, and I suggest it is a better provision. Under paragraph (a) of the amendment local authorities would be reporting on the standard of service they had adopted. Those standards would not be on a common basis and there would therefore be no possibility of a comparison of standards between one authority and another, let alone a comparison of cost. There would be no possibility of telling whether the authority was delivering value for money.
Under paragraph (b) the Committee is being asked to accept the idea that an authority should assess itself. That is hardly a basis for enabling the public to make an informed judgment on the performance of their authority.
In paragraph (c) there is a suggestion of surveys of the views of residents as to the standards adopted and the performance of their authority. As we all know, consumer surveys can be considerably influenced by the vested interest of the body asking the questions. The wording, ordering and context of the questions could be variable and could be based on the inadequacies of self-reporting. How much better for there to be an effective judgment made by local communities who will receive information in a common format about a level of service achieved by a local authority and at what cost. The public can then make a judgment unfettered by the subjective judgment of a commissioning body such as a local authority with a heavily vested interest in the outcome.
Let me make it clear that we believe it is right that authorities should determine their own standards. That would not be possible under these amendments. When it publishes its comparative information the Audit Commission will set out the standards achieved by authorities. The authorities and the electorate will be able to judge for themselves whether the standards and the costs of services provided are acceptable. We do not wish to dictate to local authorities matters which are rightfully for them to determine. We hope that these provisions will encourage authorities to improve value for money by competition and example rather than by imposition. The wording of the amendments would depart significantly from the purpose of this part of the Bill which is to enable comparisons to be made rather than to monitor performance against a statutory national standard. I urge the Committee to reject the proposals.
3.45 p.m.
Baroness Hamwee: I support this group of amendments. I am reassured to some extent by what the noble Baroness, Lady Blatch, has just told us concerning the flexibility for local assessment of local needs. However, those from the local authorities who

21
have been considering the Bill have not read it in that way. I agree with the noble Lord, Lord McIntosh. If there is a better way of expressing the objections contained in this group of amendments, I do not suppose that anyone would feel proprietorial about the drafting.
For example, the assessment of local views should not be dismissed. Opinion polling should not rule our lives but it is a most useful tool of the age in which we live. The matter of arriving at performance indicators and the whole process of discussing and agreeing them is of itself valuable. We should be encouraging local authorities to discuss those matters not just with local people but involving officers—I have seen that method work well in practice—in addressing carefully what it is the local authorities are trying to do as part of their service. Opinion polling also demonstrates the trends and indicates whether public opinion is that you are doing better or worse both in a general way and as regards specific areas of service.
What is most important is quality. We are told by the Minister that it is included in the Bill in so far as it needs to be there. Those who will be asked to implement the provisions at local authority level—that is to say, the professional bodies, the local authority associations and the recipients of the service —would be much reassured if we could use specifically the word "quality" which they see as one which actually describes what they want from their services.
Baroness Faithfull: I have great sympathy with my noble friend the Minister, but I wonder whether she can clarify the situation. Before 1970 it was the rule in every local authority in England that the medical officer of health, as he was then, had to produce an annual report. That report did two things: first, it gave local people the picture of what was being done in their area, and, secondly, it showed comparisons between one area and another. These reports were so valuable that other departments began to do the same thing. Will my noble friend explain why this would not be acceptable? Would it not help enormously in the raising of standards?
Baroness Blatch: I am not absolutely certain where my noble friend's question fits into this amendment. This does not invalidate local authorities producing annual reports about their own performance. This group of amendments substitutes a third party's objective assessment about the standards of a local authority by a local authority asking its own questions and making judgments about its own performance. It is a question of subjectivity versus objectivity. For that reason I believe that it is for local authorities to be judged by their electorates—certainly by a third party—and not to be the sole arbiter of their own quality.
Lord Tordoff: Will the noble Baroness follow the point made by my noble friend? Amendment No. 4 inserts the simple word "quality" into line 12. Although the noble Baroness dismissed it as being dependent on Amendment No. 3, it does not seem that that is so. Even the simple insertion of that word would go some way forward. We are talking about facilitating the making of appropriate comparisons.
22
The reference criteria is then given, such as cost, economy, efficiency and effectiveness. However, nowhere do I see quality mentioned.
Baroness Blatch: A very serious point is being missed. As I said at the outset of the debate on this amendment, the actual level of service—in other words, the quality level of service—will be determined quite independently by a local authority. The judgments that will be made upon it at the end of the day will be whether the chosen level of service was delivered economically, efficiently and effectively. Therefore, there will have to be a judgment about the quality and level of service chosen by that authority. It will be measured against a standard yardstick which will describe—not prescribe—a range of levels of service ranging from a very high level of service through to a lower level of service. Therefore, the freedom for local authorities to determine quality and to be judged on that chosen level of quality is what the Bill is proposing.
Lord Peyton of Yeovil: I should like to support my noble friend in resisting these amendments. With regard to the first amendment, I cannot understand what is in the mind of the noble Lord, Lord McIntosh, when he seeks, as I see it, to limit the power of the Audit Commission to require action only where a national standard has been established. As the Bill stands, the Audit Commission has the right to intervene whether or not a national standard has been imposed. That seems to be very desirable. To take that away would seem to be wrong.
I entirely share the view as I understand it, of my noble friend with regard to the insertion of the word "quality". What exactly would be added to the Bill? We already have sufficient words without the word "quality" being inserted: economy, efficiency and effectiveness. I suppose it would not do any harm to insert the word "quality", but I do not see what it would add to the Bill. I know how fashionable it is to eschew brevity and to go for length on every possible occasion, but to my mind to add the word "quality" would be to add nothing to the meaning.
Lord Stoddart of Swindon: I do not know about that. The fact is that there seems to be a fundamental difference between the two sides of the House. One side believes in true local democracy in local government and the other does not. We know which side is which, do we not? The noble Baroness has made it absolutely clear in the past two debates that while with her local government experience she would like to accept some of these amendments, her brief tells her that she must not. She knows that the amendments are a move towards democracy. She knows perfectly well that local government very much resents being told exactly what to do from on high. Local government also very much resents the erosion of its power and the limiting—indeed the ending—of the partnership which used to exist before this Government came into office. With my background and experience in local government I very much resent the interference which has gone on over so long a period.

23
It is little wonder that we are having difficulty in getting people to serve on local authorities as councillors and very often as officers when the Government seek to interfere in every nook and cranny—if I may put it that way—of local government activity. These amendments give the opportunity to the Minister to look back on her local government experience, to bring it to bear in this debate and to give some support to real local government rather than a centralised bureaucracy with gauleiters in local areas.
Baroness Blatch: This is a quite extraordinary debate. I find myself here at the Dispatch Box stoutly defending the freedom of local authorities to choose their own level of service. The noble Lord opposite has stood the argument on its head. May I remind the noble Lord opposite that under these amendments the information which local authorities would publish would also be used to assess performance against a nationally required standard of services. We are saying that local authorities should be absolutely free to determine the level of standards that they wish to provide for their local communities and at the end of the day to stand judged on that level of service as to whether it is efficient, economic and effective.
Lord Tordoff: That is contrary to what the noble Lord, Lord Peyton, said. In my view he was right. His interpretation is that the activities of the Audit Commission would be restricted. It does not relate to the local authorities themselves.
When I look at Clause 8 of the Bill, which we have not yet reached, I find the word "quality" included in relation to competitive tendering. I do not see why it is possible to have the word there and not in this clause.
Lord Stoddart of Swindon: What the Minister does not appear to understand is that national standards may very well be all right in some respects but in many other respects they do not apply. It is very difficult to apply a national standard to all the various services which are administered by local authorities throughout the country because the conditions in local authorities vary. The personnel varies and the people to be administered—the voters themselves—vary in their wants, their desires and their perception of the services provided. To try to set national standards over such a wide field removes from local authorities and the people they represent the opportunity to choose the level and quality of service that they want and at what cost to themselves.
Baroness Blatch: I am beginning to feel like Alice in Wonderland. The noble Lord is just so very wrong. It is noble Lords opposite who are calling for a national prescribed standard. I am standing here stoutly defending the right and freedom of local authorities to choose their own levels of service. I simply cannot understand the noble Lord who has positively stood the argument on its head.
As regards the Audit Commission, my noble friend said that its freedom would be restricted. As we have set the proposals in the Bill, the Audit Commission can make a judgment about any level of service chosen
24
by a local authority and whether that level of service is economic, efficient or effective. Under the amendments we would be talking about measuring only against a prescribed national standard. We are the purveyors of freedom for local authorities to choose.
4 p.m.
Lord McIntosh of Haringey: I do not know where Alice in Wonderland comes into this. There is a choice to be made—and it is not the choice that the Minister has suggested to the Committee. The choice to be made is between the procedures proposed in the amendment, which are contracts based on locally set standards between local authorities and their residents, with national standards where they are appropriate—but only where they are appropriate—and a nationally based prescriptive series of provisions which is so complicated and so remote that it will never work.
I have before me the performance review supplement implementation guide published by the Audit Commission in August 1990. It is by no means complete. I cannot count the pages because they do not seem to be numbered. The guide is very thick. It is impossible to set standards of that kind for all local authority services. I shall give, as an example, the simplest type of service—refuse collection. One can set the standards nationally about how often and at what cost the bins shall be collected but one has to take into account, if one is judging a local authority's performance, whether the local authority is using dustbins, wheely-bins or plastic sacks; one has to take into account whether the collection is from the kerbside or from wherever the householder keeps the bin on the property; one has to take into account the distance between properties—in other words, whether it is an urban area or a rural area; one has to take account of whether the local authority is good at recycling—in other words, whether it collects various kinds of household waste differently for recycling or re-use. All those considerations have to be taken into account. Only the local authority and its own residents know the significance of those elements and therefore only a local authority and its residents can make a judgment about whether the job is being done efficiently at the standard set and at a proper cost.
I am astonished that the Minister should couple with her misunderstanding of the amendments an attack on surveys of local people. She will know that the Government spend many millions of pounds a year on surveys of the users of public services. A good deal of that money goes to my own company, and I am very grateful for it. But it is not vitiated by the fact that it is being commissioned by government. It is supposed to be done objectively and professionally. That is exactly what the Audit Commission could and should require for the survey of the views of residents set out in paragraph (c) of Amendment No. 11.
If the Minister really thinks that she is living in Wonderland she should contrast the view that she has expressed in Committee today with what is happening in the health service. In the health service there are

25
national charter standards, but there are also local charier standards. As the National Health Service publication states on the subject:
"Many aspects are services which are important to you and which your health authority needs to consider. From April 1st 1992 authorities will increasingly set and publicise clear local charter standards on these matters, including waiting times for first appointments, waiting times for accident and emergency …"
I could continue with the quotation but the detail of the health service is not relevant. The point is that there are in the health service national charter standards—we have preserved those in our amendment—but there are also local standards. It is up to local authorities to set those standards and to negotiate with the people in their own areas.
Baroness Blatch: Can the noble Lord explain to the House why he asks in the amendments that national standards should be met? Indeed the Audit Commission's powers would be limited unless nationally prescribed standards were met. I read from his amendments, not from mine.
Lord McIntosh of Haringey: There is a place for national standards, as there is in the health service. But there is not a place for all-embracing, prescriptive, national standards, which is what the Government are proposing here. When we seek to limit national standards to those aspects of local authority services for which they are genuinely suitable, as in national standards for the health service, we propose to replace those national standards or supplement them by local standards—locally determined, locally negotiated, locally publicised and locally agreed—but subject to the guidance of the Audit Commission, as is set out in Amendment No. 11. The interest of central government is fully protected. The interest of comparability is fully protected. But the fundamental contract between local authorities and their people, which is what local democracy is all about, is also protected. It is not protected by the Government's proposals. That is the essence of the amendments.
Baroness Blatch: I am grateful once more to the noble Lord. Does he not agree that in every single answer I have given him I have defended local authorities' right to choose their level of service? The amendments fly in the face of that and determine that the measurement must be made against a nationally prescribed standard. That flies in the face of a local authority choosing its level of service.
Lord McIntosh of Haringey: We have now come to the crux of the matter. We have now identified the source of the Minister's misunderstanding of the amendments and indeed of a large part of this part of the Bill. The Minister is now making it clear that central government set standards and the level of service provided is to be determined by local authorities.
Baroness Blatch: The standard to be set is set by the local authority, not by the commission and not by the Government. The local authority chooses its level of service. The commission and indeed the local community will judge a chosen level of service against a described, not a prescribed, range of levels of service.
26
What the noble Lord is advocating is that there should be nationally prescribed standards. What we are advocating is that local authorities shall be free to choose the level of standards they wish to provide for their local communities.
Lord McIntosh of Haringey: The Minister sometimes uses the word "standards", she sometimes uses the phrase "level of standards", and she sometimes uses the phrase "level of service". They are not the same thing. The noble Baroness used different words at different times. I agree that the Government are providing in the Bill that local authorities shall set their own levels of service. But what is being required—this is why it is so enormously complicated and so difficult to do —is that those levels of service shall be set in terms of criteria laid down by the Audit Commission.
I understand the reasons for that. I understand that the noble Baroness is looking for comparability between one local authority and another. That is not a worthless thing to look for. What I am saying is that the difficulty of it will be so great, the bureaucracy will be so great and the lack of consonance with local conditions will be so great that it will not work. There will be some space for national standards. We support that and the Government support that. Why they should deny it I do not know. But where national standards will not work and where it will be impossible to set national criteria against which local authorities will set their own levels of service, we propose a different, more realistic and more local approach. We propose that under the guidance of the Audit Commission local authorities shall deal with their residents. That is what local democracy is all about. It is the exclusion of local people from the negotiating process that is the hallmark of the Government's approach to all of this part of the Bill. That is why, with all the good intentions in the world, the Government persist in misunderstanding the meaning of the amendments and indeed persist in misunderstanding the import of their own provisions. If they had listened to what has been happening in the National Health Service they would have realised how far they are away from reality. I am sorry but I shall have to seek the opinion of the Committee.
4.10 p.m.
On Question, Whether the said amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 131.

Division No. 2

CONTENTS

Aylestone, L.

Cocks of Hartcliffe, L.

Beaumont of Whitley, L.

David, B.

Birk, B.

Desai, L.

Bonham-Carter, L.

Donaldson of Kingsbridge, L.

Boston of Faversham, L.

Donoughue, L.

Bottomley, L.

Dormand of Easington, L.

Broadbridge, L.

Ennals, L.

Brooks of Tremorfa, L.

Fisher of Rednal, B.

Bruce of Donington, L.

Gallacher, L.

Carmichael of Kelvingrove, L.

Galpern, L.

Chorley, L.

Gladwyn, L.

Cledwyn of Penrhos, L.

Graham of Edmonton, L. [Teller.]

Clinton-Davis, L.

27

Grey, E.

Monson, L.

Hampton, L.

Morris of Castle Morris, L.

Hamwee, B.

Nicol, B.

Hanworth, V.

Peston, L.

Hilton of Eggardon, B.

Redesdale, L.

Hollis of Heigham, B.

Richard, L.

Hooson, L.

Ritchie of Dundee, L.

Houghton of Sowerby, L.

Robson of Kiddington, B.

Hunt, L.

Rochester, L.

Kennet, L.

Seear, B.

Kissin, L.

Serota, B.

Leatherland, L.

Shackleton, L.

Listowel, E.

Shepherd, L.

Llewelyn-Davies of Hastoe, B.

Stedman, B.

Longford, E.

Stoddart of Swindon, L.

McGregor of Durris, L.

Strabolgi, L.

McIntosh of Haringey, L.

Taylor of Blackburn, L.

Masham of Ilton, B.

Tordoff, L. [Teller.]

Mason of Barnsley, L.

Underhill, L.

Mishcon, L.

White, B.

Molloy, L.

Winchilsea and Nottingham, E.

Monkswell, L.

NOT-CONTENTS

Alexander of Tunis, E.

Gridley, L.

Allenby of Megiddo, V.

Grimthorpe, L.

Ampthill, L.

Hailsham of Saint Marylebone, L.

Arran, E.

Astor, V.

Halsbury, E.

Astor of Hever, L.

Harmsworth, L.

Atholl, D.

Henley, L.

Balfour, E.

Hesketh, L. [Teller.]

Bauer, L.

Hives, L.

Beloff, L.

Hood, V.

Belstead, L.

Howe, E.

Bessborough, E.

Jeffreys, L.

Birdwood, L.

Jellicoe, E.

Blanch, L.

Jenkin of Roding, L.

Blatch, B.

Johnston of Rockport, L.

Blyth, L.

Kimball, L.

Boardman, L.

Kinnaird, L.

Borthwick, L.

Kinnoull, E.

Boyd-Carpenter, L.

Knollys, V.

Brabazon of Tara, L.

Lauderdale, E.

Brougham and Vaux, L.

Lawrence, L.

Butterworth, L.

Liverpool, E.

Campbell of Croy, L.

Long, V.

Carnock, L.

Mackay of Clashfern, L.

Cavendish of Furness, L.

Macleod of Borve, B.

Clanwilliam, E.

Macpherson of Drumochter, L.

Clitheroe, L.

Malmesbury, E.

Cockfield, L.

Mancroft, L.

Coleraine, L.

Manton, L.

Colnbrook, L.

Marsh, L.

Constantine of Stanmore, L.

Merrivale, L.

Cottesloe, L.

Mersey, V.

Cox, B.

Mills, V.

Craigavon, V.

Milverton, L.

Cross, V.

Morris, L.

Cumberlege, B.

Mowbray and Stourton, L.

Davidson, V. [Teller.]

Munster, E.

De Freyne, L.

Nelson, E.

Denton of Wakefield, B.

Nelson of Stafford, L.

Dilhorne, V.

Orkney, E.

Eccles of Moulton, B.

Oxfuird, V.

Effingham, E.

Pender, L.

Elibank, L.

Penrhyn, L.

Ellenborough, L.

Peyton of Yeovil, L.

Elles, B.

Platt of Writtle, B.

Elliot of Harwood, B.

Plummer of St. Marylebone, L.

Elliott of Morpeth, L.

Porritt, L.

Erroll of Hale, L.

Quinton, L.

Faithfull, B.

Rankeillour, L.

Fanshawe of Richmond, L.

Reay, L.

Flather, B.

Renton, L.

Fraser of Kilmorack, L.

Seccombe, B.

Gainford, L.

Selborne, E.

Gardner of Parkes, B.

Shannon, E.

Gray, L.

Sharples, B.

Gray of Contin, L.

Shrewsbury, E.

28

Skelmersdale, L.

Thorneycroft, L.

Strange, B.

Trumpington, B.

Strathcarron, L.

Ullswater, V.

Strathmore and Kinghome, E.

Vaux of Harrowden, L.

Swansea, L.

Vivian, L.

Swinfen, L.

Waddington, L.

Terrington, L.

Wade of Chorlton, L.

Teviot, L.

Wise, L.

Thomas of Gwydir, L.

Wynford, L.

Resolved in the negative, disagreed to accordingly.
4.18 p.m.
[Amendment No. 4 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 5
Page 1, line 13, after ("effectiveness") insert ("and including all information relating to the performance of statutory duties").
The noble Lord said: Amendment No. 5 is, in effect, a cry of pain; it is not a cry of pain from me but from a number of small organisations which are part of the Community Rights Project. The example that I shall give the Committee is one of misjudgment, to put it mildly, by a Labour-controlled council. Therefore, let no one think that this is a party-political matter.
Perhaps I may first explain the purpose of the amendment. It would add to the primary conditions of the Citizen's Charter the requirement that, in addition to economy, efficiency, effectiveness and cost, the words,
"including all information relating to the performance of statutory duties",
should be inserted.
I know that there are many amendments to follow on the subject of information. However, I do not think that this one will in any way prejudice those future amendments. It is an attempt to bring to the top of the agenda for discussion the problem of differences which exist between one council and another. In bringing the matter to my attention, the Community Rights Project pointed out many examples where councils have done well in providing training for councilors, access to information and meetings. Such councils have also provided good informative leaflets on public rights.
However, the example that I wish to bring to the attention of the Committee concerns the London Borough of Southwark. There, the Hummingbird Community Project was threatened with closure in March this year after a successful life of eight years. During that time, it provided adult and toddler facilities, advice work, group work, community facilities, a creche and holiday play schemes for about 30 children in the Glengall Road area of Southwark. Some of those children were referred to the project by the social services department and some by the families themselves. The project had had a grant for many years and then suddenly, without a reason being given, that grant was withdrawn. On 17th May this year the nursery was closed, with the loss of 30 places for the under-fives, and the staff was made redundant.
No one is saying that projects cannot be closed or that a local authority does not have the right to close such projects if, in its judgment, that is the correct thing to do, or if it does not have the money to provide the service, however valuable the service may be.

29
However, what happened, according to the project sponsors, was that they were given no information on how to appeal to the council, how to have the matter dealt with and how to express their views to the council. Southwark Borough Council's social services committee is meeting today and the central grants committee is meeting on 5th December. It is recommending that more of the grant, which had originally come from outside, should be released to the project, so there is some prospect of the project reopening. But between 17th May and today, the people responsible for the project have been unable to get the matter on to the council's agenda or to obtain from the council a clear expression of their rights.
I have chosen one example from a Labour-controlled council. I fear that there are many more. I am expressing the pain that those people feel as a result of not having access to information about the council's statutory duties and their rights as residents of the area. I beg to move.
Baroness Blatch: I must confess that I am at a loss to understand fully what the noble Lord has been saying about the amendment. The amendment relates to the performance of statutory duties. If he believes, as he appears to, that a local authority's statutory obligations were breached, then it is possible to invoke a number of measures, including an allegation of maladministration against the authority.
The amendment appears to be inserting a requirement for the Audit Commission to give directions by reference to the performance of statutory duties. That is unnecessary. The directions will of necessity have to take account of how a local authority meets and performs its statutory duties. I cannot conceive that the Audit Commission would not take that fundamental matter into account. The amendment is unnecessary, and I hope that the Committee will reject it.
Lord McIntosh of Haringey: The Committee will not have the opportunity to reject the amendment, because I am not going to press it. It is not that kind of amendment. The complaint of the people of Southwark is that Southwark does not have, as all good councils should have, written information about rights available to the public in respect of the conduct of public meetings. Many of them do not understand what happens. They do not understand what is meant by an agenda. They do not understand what is meant by minuses of a meeting. Without help they are lost in dealing with the bureaucracy. The access to public bodies legislation relating to local authorities—the Minister will forgive me for not giving the name of the legislation correctly—provides that meetings of that kind should be open. It does not adequately provide that the council should obey the spirit of those open meetings by helping people to use the meetings to pursue their cases. The wording of the amendment does no more than take the opportunity to express the feelings of people whose views I have been passing on to the Committee. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Mills Viscount Mills moved Amendment No. 6
Page 1, line 13, after ("effectiveness") insert ("and the protection of the environment").
The noble Viscount said: Clause 1 sets out four criteria against which standards of local authority performance will be compared. They are cost, economy, efficiency and effectiveness. However, it is not sufficient for local authorities merely to provide a cheap, efficient and effective service if there is to be an environmental cost. The purpose of the amendment is therefore simple. It seeks to add a fourth criterion—the environment. Its inclusion would ensure that relevant environmental data are included in the information required from local authorities by the Audit and Scottish Accounts Commissions; and that environmental criteria will be considered by those bodies when assessing the performance by local authorities.
The Bill presents a real opportunity to ensure that local authorities carry out their activities in such a way as to safeguard and, where possible, to improve the environment. The inclusion in the clause of a requirement for a general audit of the environmental performance of local authorities would help to realise that opportunity. I beg to move.
Baroness Nicol: I support the amendment. We have come to expect that many traditional local authority services will be subject to scrutiny and regulation; but somehow the environment is in a different category. It has only fairly recently become important in local authority terms. It is therefore vital to draw attention to it on the face of the Bill. I hope that the amendment will be accepted.
Baroness Hamwee: The amendment is an interesting one and not one that Members on these Benches would wish to discard without the most serious consideration. I hope that from what I say it will not be inferred that we feel that the environment is unimportant. The difficulty is that to insert such a criterion at this point in the Bill would, if it were accepted, make it only the first of a long line of criteria which should be considered—for example, matters like freedom of information, women's issues, equal opportunities and so on. I doubt whether it is appropriate or possible to list everything which should be considered. I am also a little doubtful as to whether I would wish to rely upon the Audit Commission—admirable body though it is—with regard to environmental standards. I sympathise, and I hope that what I am saying is not misunderstood, but I cannot support the amendment.
Earl Howe: It is easy to have sympathy for the intentions of this amendment. Indeed, I do have sympathy for its intentions, and I fear that in rising to oppose it I shall appear to be guilty of an old-fashioned attitude to matters environmental. But we have to be hard-headed, though not, I hope, hard-hearted. Legislation needs to be reasonable, and reasonably capable of being implemented. I do not believe that the amendment stands up to that kind of scrutiny.
In many areas the criteria of economy, effectiveness and efficiency are related directly to environmental

31
considerations. Waste collection and disposal are the obvious examples, but I am sure that Members of the Committee will be able to think of many others for themselves. In those cases the requirements of the Bill as it stands already provide for local authority performance, in protecting and respecting the environment, to be measured; and no further amendment is needed.
However, I agree that that is not the whole picture. It is important that environmental awareness should extend across the whole range of government activity, and I include central as well as local government in that statement. We all need constantly to be aware of the environmental implications of what we do. But, as the noble Baroness, Lady Hamwee, has just pointed out, that is true of so many other things. In developing their policies and performance, local authorities have to be constantly aware of a whole range of factors. Environmental considerations represent one factor among many others—an important factor, to be sure, but not the only one.
How are we to measure the ways in which authorities weigh up these different considerations, and indeed is it appropriate to do so? I suggest that it is not appropriate to single out one of the contributing factors in the decision-making process, as this amendment would do, and require its effects to be quantified. I am sure we all recognise the importance of the issues which have been raised. Certainly on our side of the Committee that is the case; but, for the reasons I have stated, I invite my noble friend to withdraw his amendment.
4.30 p.m.
Viscount Mills: I am disappointed and surprised by the Minister's response: disappointed because I believe that this amendment upholds an important principle, and surprised because of the inconsistency of the response in relation to the Government's policy on the environment. The Minister of State for the Environment and Countryside, David Trippier, in a letter to The Times on 26th November, stated that so far as he knew no other government requires each of its departments to produce an annual account of their environmental stewardship. He also emphasised that Britain has taken a clear lead in giving practical commitment to integrating the environment with other areas of policy. Why should any less be expected of local government? Indeed in the summary of the White Paper on the environment, This Common Inheritance, the philosophy of action for all is clearly stated. I quote:
"Although the Government has to be in the lead, responsibility for our environment is shared by all of us: it is not a duty for Government alone. Businesses, central and local government, schools, voluntary bodies and individuals must all work together to take good care of our common inheritance."
If we are fully and truly committed to safeguarding and improving our environment, clear and consistent environmental policies are needed which extend throughout all the relevant legislation. These policies should not be picked up or put down at will. I beg leave to withdraw the amendment.
Lord Tordoff: Before the noble Lord does what he intends to do, may I suggest to him that if he had supported Amendment No. 11, that might have been an appropriate place at which to insert his amendment.
Earl Howe: If I may just interject briefly before my noble friend metaphorically sits down, I should like to say to him that, as I see it, the amendment is based on a misconception as to how the system of directions and comparisons is expected to work. Considerations of environment and, for that matter, quality of service, to hark back to an earlier amendment, are built into the commission's direction, which conditions how the relevant bodies report their performance.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 7
Page 1, line 14, after ("or') insert ("service and").
The noble Lord said: In moving Amendment No. 7 I should like to speak also to Amendments Nos. 8 and 18. In a sense I suppose we are going back over the same ground as we have been over before. I hope we shall do it with fewer accusations of being like Alice in Wonderland because I believe that these amendments are relatively clear. Some of the points in support of them have been touched on already and have achieved widespread recognition.
Let us begin by recognising that the Audit Commission is the creature of the Secretary of State. I intend no disrespect to the Audit Commission because that is actually what is provided for in Schedule 3, paragraph 1 of the Local Government Finance Act 1982, which says that the Secretary of State may give the commission directions as to the discharge of its functions and the commission shall give effect to any such directions. There is no greater level of control in legislation than can be given by that little subsection. The Secretary of State does not even have to specify in advance or tell Parliament what directions he is going to give. Whatever the directions, the Audit Commission has to comply with them.
The Audit Commission has, quite laudably and admirably, set out on the road of providing performance indicators. Amendments Nos. 7 and 8 seek to say that these indicators should be of standards of service and performance achieved by the different relevant bodies in that financial year and in different financial years. In other words, the comparison should not only be of output, to use the dimension we talked about when discussing the first amendment, but also should be in terms of outcome: the service, the quantity and quality being produced.
The Audit Commission, inevitably and quite understandably, has started with the relatively easy services. I spoke earlier about refuse collection as being a relatively easy service and I pointed out that many of the dimensions in the evaluation of refuse collection are not and cannot be adequately considered in the Audit Commission's guidelines. I spoke about kerbside collections, the nature of the bins or bags used and recycling policies. Of course one can add to that list. As has been said, one can have criteria for action to be taken when there are

33
complaints, to weight the costs to reflect journeys between different houses and to weight the cost of the different frequency of collection. What is the policy for large items? Is it a civic amenity site, a skip or a special collection? What is the policy on garden refuse? One could continue with these questions.
There are many things to be considered, even in regard to the relatively simple service of refuse collection. Imagine how much more complicated it will be if the Audit Commission starts to get on to the really difficult areas like housing and education. The Secretary of State for Education is digging himself into ever-deeper pits of dispute with educationalists, teachers and parents around the country by attempting to over-specify what shall be contained even in primary education. Imagine what is going to happen if the Audit Commission has to set standards alongside those which the Secretary of State for Education sets for quality of service in education. I think that the Audit Commission, which is bold and relatively realistic, understands the difficulty of all this.
In Amendment No. 18, which is the third and most important of these amendments, we say that the Audit Commission shall not simply consult the local authority associations but shall actually agree with them what comparison should be made on standards of service, standards of performance and value for money. If that is compromising or reducing the role of the Audit Commission and increasing the role of local authorities, so be it. I think that is a proper way for us to approach this. After all, it is the local authorities who are providing the services and it is they who are responsible to their electors. It is the local authorities who have the day-to-day knowledge of what they have to do and of the difficulties of explaining that and evaluating it.
I feel sure that if these amendments are adopted by the Committee the relationships between the Audit Commission and the local authority associations will be that much better, and the adoption of common standards of comparison will be facilitated by the need for them to be by agreement rather than simply by consultation. I beg to move.
Baroness Hamwee: I support this group of amendments, but I wish to address my remarks to Amendment No. 18. That amendment seeks to include a mechanism not for mere consultation but to achieve the agreement of the relevant parties. In my professional life when I use the word "consult" in a contract, I always know that it means that I have to ask for opinions but not necessarily take any notice of the answer. I am sure that is not what is meant by that term here. I hope we can provide a mechanism that—I do not suggest that the Audit Commission will not do the job properly—will assist the whole process. I hope the mechanism will allow local authorities, through local authority associations, to own—as today's terminology expresses it—the result of that consultation and discussion exercise. I support the amendments.
Baroness Seear: Why are the Government giving so much authority to the Audit Commission? I am sure
34
it is is composed of excellent people. Those I have met are excellent people. How many of those people are accountants, however? Accountants are not particularly qualified to make judgments on all the matters they are being asked to make judgments on. My former boss in industry used to say that accountants are excellent servants but extremely bad masters. That has been my experience. How qualified are accountants to give opinions on quality? They are qualified to give opinions on cost, but quality is a different matter. Who are these chaps?
Lord Boyd-Carpenter: Any measure to compel the Audit Commission to agree with the local authority associations would effect quite a substantial alteration in the Bill. If one is compelled by statute to agree with someone, one has to accept anything that is put forward by that person. That position would seriously weaken the impartial position of the Audit Commission. I hope therefore that we shall retain the word "consult" which seems to get the balance about right.
Baroness Hamwee: I would say in response to the noble Lord that there may not be agreement. That is the point of the amendment. If agreement is not reached, everyone will have to continue until they reach an agreement. There might be a better result at the end of that process than if the process had not been attempted.
Lord Boyd-Carpenter: The noble Baroness seems to be saying that if the local authority associations dig in their heels, the Audit Commission will be compelled to trail along behind them and accept whatever they dictate. Is that her view?
Lord McIntosh of Haringey: The same thing could be said in reverse. After all, an agreement works both ways. It could be said that if the Audit Commission digs in its heels, local authorities would be compelled to trail along behind it. As anyone who is involved in complicated negotiations in business or in public life knows, reaching an agreement is a matter of both sides making concessions. It is not a question of one party trailing behind another.
Lord Skelmersdale: It is important to establish what happens when the parties do not reach an agreement. Surely such a situation would blow an enormous hole in this section of the Bill.
4.45 p.m.
Earl Howe: I am sure it will come as no surprise to the noble Lord to hear that the Government cannot accept these amendments. Amendments Nos. 7 and 8 would introduce a requirement for standards of service as well as performance to be measured. Standards of service are a matter for the local authority to determine. The extent to which a local authority achieves the standard of service is a measure of its effectiveness. Under Clause 1 of the Bill as printed this is one of the criteria to be taken into account. We therefore feel it is not necessary to add the proposed additional words to the Bill.

35
I would say in reply to the noble Baroness, Lady Seear, that the Audit Commission is not simply composed of accountants. Accountants form only a minority of the Audit Commission's members. The members are mainly professional people from other disciplines.
Amendment No. 18 would impose an arrangement whereby the Audit Commission would be required to reach agreement with local authority associations before giving directions. This would effectively give local authorities a veto over any such direction which the Audit Commission planned to issue. One cannot force people to agree on something. Once it is known that there is a mechanism for escaping a direction, certain local authorities will be only too ready to take advantage of that.
Such an arrangement is flawed, and I believe wholly unworkable. Local authorities should have the opportunity to make their views known and offer constructive criticism before a direction is issued. That is why the Bill has a requirement built into Clause 2(3) to consult before such directions are issued. But ultimate responsibility must rest with a single body and not be dispersed between different agencies and interests. Such an arrangement would be a recipe for inaction and confusion. For the reasons I have given, I recommend therefore that these amendments be rejected.
Lord McIntosh of Haringey: The noble Earl has expressed the oversimplification of the year in that reply. He has said that the extent to which a local authority achieves a standard of service is the measure of its effectiveness. It is not possible to omit to mention more dimensions of quality of service in one simple sentence than the noble Earl did just now. The extent to which a local authority achieves a standard of service is one measure of what the Government would wish to define as the effectiveness of a local authority. However, the extent to which it satisfies local people, or the extent to which it provides genuine competitive quality in relation to other local authorities is not covered by the formulation used by the noble Earl.
I am sorry the Government feel that way about the amendment. I am also sorry it should be thought that the search for agreement is somehow inferior to what is in effect consultation when the decisions are in the hands of the Audit Commission. I am sorry that the independence of local authorities should be whittled away to such a great extent by the provisions of this part of the Bill.
Lord Tordoff: Does not the noble Lord agree that the statement we have just heard indicates the extent of the Government's attack on local authorities? This is a means of handing over local authorities to the Audit Commission in every sense. The Government are not just trying to improve efficiency. They wish to dictate to local authorities what they shall do and when.
Lord McIntosh of Haringey: I wholeheartedly agree with that. As I said in introducing the amendment, for
36
the term "Audit Commission" one should in effect read "Secretary of State". As I made clear in referring to the 1982 Local Government Finance Act, the Secretary of State gives directions on any aspect of the Audit Commission's activities, and the Audit Commission gives effect to those directions. There is no question of consultation or of having regard to opinions. The Audit Commission does what the Secretary of State dictates.
Earl Howe: The noble Lord appears to be saying that the Audit Commission is somehow a creature of the Secretary of State. It is quite true that the Secretary of State can give directions but the Audit Commission is an independent entity. It always has been independent and I trust it always will be. We value that independent judgment from the Commission and we want to keep things that way. Any directions would have to be subject to prior consultation with the Audit Commission and with the local authority associations. That is the safeguard here.
Baroness Seear: That may be all right while there are nice people such as the noble Earl in the Ministry giving directions. We have referred to such examples so often in this Chamber. However, one day it may be the noble Lord, Lord McIntosh, giving directions. There is no safeguard here for independence. The Secretary of State appoints the members of the Audit Commission and he can sack them. He directs them.
Earl Howe: The key thing to remember is that what we are writing into the Bill is the provision that local authorities can choose their own quality and level of service. It is up to them to do so.
Lord McIntosh of Haringey: I am afraid that is not what the Bill says. The Bill states that although all of these provisions are set out by the Audit Commission, its only responsibility as regards local government is to consult with it. It is perfectly possible under the terms of the Bill for the Audit Commission to consult with local government and to reject the views—perhaps not out of hand—expressed during the consultation process. The noble Earl accused me of calling the Audit Commission a creature. That is the case. I am not attacking the individuals in the Audit Commission or the way they carry out their work. However, the law is clear. The Audit Commission is a creature of the Secretary of State. As has been said, the Secretary of State can appoint and sack the members of the Audit Commission and can disregard or pay attention to its findings as he wishes.
There is no provision in the 1982 Act for consultation on the directions to be given to the Audit Commission. "Creature" is not a term of abuse. Anyone who has read the Rupert Brooke letters knows that it is a term of affection which he used to refer to a loved one—and look at what happened to him.
It must not be thought that we on these Benches are attacking the Audit Commission. We are attacking legislation in which the Government, through the Audit Commission, are laying down in detail how local authorities will be run.
Lord Skelmersdale: I am very grateful to the noble Lord, Lord McIntosh, for giving way at this point. Since starting to speak this afternoon has he re-read lines 11 and 12 of page one, from which it is quite clear that the only role of the Audit Commission is to facilitate the making of appropriate comparisons? How then can the noble Lord, the noble Baroness, Lady Seear, the noble Baroness, Lady Hamwee, or anyone else suggest that any force majeure or direction is imposed on local authorities, either by the Secretary of state or the Audit Commission? The noble Lord has lost me totally. If he could explain it to me he might even have me on his side.
Lord Cockfield: With all due respect to the noble Lord, Lord McIntosh of Haringey, I think he has misunderstood the constitutional position in the case of independent bodies. It is normal practice to include in an Act a reserve power for the Secretary of State to give directions. The reason it is done in that way is to maintain the rights of Parliament, because when a direction of that kind is made by the Secretary of State it becomes debatable in both Houses of Parliament.
Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Cockfield, with all his experience, for that correction. Of course I accept what he says.
The noble Lord, Lord Skelmersdale, quoted correctly from line 11 of Clause 1. However, the whole of that part of the Bill, up to and including Clause 9, imposes obligations on local authorities. The matter is a good deal more complicated than he thinks.
Regarding the response of the Minister, the noble Earl, Lord Howe, to the point about accountants, it is certainly true that membership of the Audit Commission itself is drawn from a large number of professions. However, the staff of the Audit Commission are almost entirely accountants. Of the 1,000 employees of the Audit Commission, 850 are involved in district audit. Of those the most senior are the 323 qualified and part-qualified accountants. Among the 150 staff employed in the central directorate there are 29 accountants. Accountants are in charge of the Audit Commission. That is what the commission is there for. That is what audit means. Audits are carried out by accountants. I do not believe that the membership of the commission is a relevant consideration.
The amendments cover ground on which the Committee has already expressed an opinion. Therefore it would not be proper for me to seek the view of the Committee again on a similar subject. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 9
Page 1, line 17, at end insert:
("provided that no direction issued for the purposes of paragraph (a) or (b) above shall have the effect of requiring a relevant body to publish information which is commercially confidential and which concerns a service subject to compulsory competitive tendering.").
The noble Baroness said: The purpose of the amendment is to prevent the Audit Commission, if the
38
Committee so agrees, from requiring the disclosure of information which could be of practical advantage to outside organisations interested in tendering for local authority services.
We all accept that a local authority has a fiduciary responsibility to achieve value for money on behalf of its residents and local taxpayers. Clearly it can only exercise that duty to secure value for money if information which is commercially sensitive in relation to compulsory competitive tendering is kept confidential. The Local Government (Access to Information) Act 1985 quite rightly opened whole categories of public business to public scrutiny and the public domain. Nonetheless, it recognised that financial or business information affecting an individual, or, for example, the expected cost and terms of a contract for the acquisition of property, goods or services, should remain confidential for obvious and good reasons.
For example, to take a very common case, a local authority might be proposing to buy property. The relevant committee might steer the local authority's officer as to the maximum price which that officer might agree in negotiations on that contract. It is clearly in the public interest that that maximum figure should not be disclosed in public because otherwise the local authority's price would be forced up to the maximum figure. That is an obvious example which we all accept, and it was recognised in the 1985 legislation, which in all other ways was designed to open up local government information. There appears to be no such protection in this Bill. That is why I hope that the Committee will accept the amendment.
The Audit Commission can require the publication of information relevant to performance standards in ways which, I suggest, could give an unfair commercial advantage to competitors. In the process of seeking to help local authorities achieve value for money, the Audit Commission may undermine value for money. For example, if the Audit Commission requires detailed information about the pricing of refuse collection in terms of unit costs and productivity per employee, that would allow competitive contractors to underbid for that contract. Equally, the organisation of the workforce and level of supervision expected in a task which has not yet gone out to CCT is also commercially sensitive information.
I hope that Members of the Committee will accept that we do not want local authorities to disclose the very information which would allow the private sector to undermine value-for-money considerations. That is even more important where there may be a risk of cartels, such as we have seen in recent revelations about price fixing for window frames, bricks and glass, or where there is a monopoly private competitor. If local authorities are not able to protect commercially sensitive information it will not be local authorities as such which lose out but the local taxpayer, who will pay more than he or she should for the service. It has always been accepted under the 1985 Act that commercially sensitive information should be protected. We seek from the Minister an assurance that under this Bill such information will not be released through

39
the Audit Commission in ways which would undermine what we all seek to achieve—value for money. I beg to move.
Baroness Blatch: The amendment seeks to prevent the Audit Commission from issuing directions requiring publication of information which is commercially confidential and relates to a service subject to compulsory competitive tendering.
Once again this part of the Bill is seriously misunderstood by the noble Baroness. The Audit Commission issues directions about performance achieved and not about potential performance. Therefore information published will relate to previous years.
In practical terms it is difficult to envisage circumstances in which directions under Clause I could require commercially confidential information to be published. If, as the inclusion of the second restriction suggests, it is information on tendered services which concerns Members of the Committee, I would simply point out that information on past costs is already in the public domain. At the time of an audit those interested may examine information relating to accounts, including contracts and bills, by virtue of Section 17 of the Local Government Finance Act 1982. The information published will relate to previous years.
In the case of services subject to compulsory competitive tendering an authority will set out in the contract the standard of service to be provided. The authority will be responsible for monitoring the performance of a contractor. Therefore, it is at least as desirable that the contract services should be subject to directions as it is for in-house services, if not more so. That is the argument that I would expect noble Lords opposite to press. I can see no justification for excluding those services from the provisions and I urge the Committee to reject the amendment.
Baroness Hamwee: I thank the Minister for that reply, which I found extremely helpful.
There may be occasions when information published after the event could impinge on confidentiality. I do not intend to press the amendment, but I wonder whether the Minister might take back the anxiety that has been expressed, particularly in the light of the wording in the Competing for Quality White Paper which states on page 6, under the heading of "Guide to Good Buying":
"Contracting out should not affect security, confidentiality and privacy".
5 p.m.
Baroness Blatch: The noble Baroness makes an important point. When regulations are formulated they will have to preserve confidentiality, where appropriate. That is right. The other safeguard is that, by issuing directions, the Audit Commission will have to consult local authorities. It will be for them to negotiate what they believe is confidential and it will
40
be for the Audit Commission to be sensitive to the need for addressing confidentiality as long as it is in the public interest and not against it.
Baroness Hollis of Heigham: That was a helpful answer from the Minister. She said that a great deal of the information with which we are concerned will have been published in previous year reports. Nonetheless, as contracts come up for renewal—for example, where it is at present an in-house service which has been won under the previous CCT legislation and goes out for further contract—there may well be situations in which information is on the borderline between that which is currently in the public domain and that which would give competitors unfair commercial advantage. Incidentally, that argument may well be repeated when we deal later with internal trading accounts. Again, there is a clear line through all of this between what is in the public interest, given that people have a right to know what they are paying for their services, and what is commercially sensitive, which would give a competitor an unfair advantage when pitching his bid.
We shall see what the Minister has to say on the matter. I thought helpful her remarks that it was appropriate for local authorities to talk to the Audit Commission before publication. Members on both sides of the Committee recognise the tightrope that must be walked and the need to ensure value for money in the public interest. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 and 11 not moved.]
Baroness Hollis Baroness Hollis moved Amendment No. 12:
Page 2, line 3, after ("direction") insert("(i)").
The noble Baroness said: In moving this amendment I should like to speak also to Amendment No. 14.
This amendment deals with the point at which the role of the Audit Commission, as envisaged by the Government, and the use of customer contracts, as described by my noble friend Lord McIntosh earlier this afternoon, overlap. It is the point at which we make common ground. The amendment has two purposes. First, it seeks to improve on the definition of the word "publish" in the Bill. Secondly, it seeks to clarify what might be a potential overlap with the 1986 Local Government Act. Perhaps the Minister will be able to give us an assurance that will allay our worries.
Perhaps I may deal with the first of those points. As the Committee will have noted from our earlier discussion, for performance standards to be effective and appropriate, they need to measure both the input and the output value of local authority services. Clearly, for them to be relevant to local people they must be monitored and scrutinised in appropriate ways. As I understand it, all that is required at present is that the information associated with that need only be published in a newspaper. It might be the back page of a newspaper or in the small print. Speaking as a former member of the Press Council, I can see how skilful the press can be in avoiding large-scale publicity in response to complaints. We on this side—and, I hope, Members on the other side—will accept

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that we want to ensure more than the minimum possible observance of the publication and publicity for those standards.
The amendment therefore proposes that not only should local authorities be required to publish that information in local newspapers, but that publicity should go out with local tax bills, much as happens at present with current levels of expenditure proposals under the poll tax, or perhaps in special leaflets such as local council newspapers and publications in a variety of languages. In other words, we wish to empower local authorities to extend the concept of "publish" as laid down in the Bill and by cross-reference back to the 1986 Act. We genuinely want that information to be as open, accessible and available as possible and we fear that the Bill may be drawn too tightly in that respect.
Secondly, we fear that the Bill may run foul or may put local authorities in the position of running foul of the 1986 Act. I am sure that the Committee will remember that that Act limited local authority expenditure on publicity, whether through newspapers, leaflets or whatever, to two areas. First, Section 3 stated that local authorities may publicise only matters concerned with the functions of a local authority and not with the wider considerations affecting local government. Secondly, Section 2 limited local authority expenditure on publicity where it was designed to affect or might have the consequence of affecting support for a political party. In practice, the Act has not turned out to be as restrictive as local government feared. Seventy per cent. of local authorities have no problem with it. The 30 per cent. that did have problems reflected all parties and all types of authority. It appears to be hung councils which have had the most difficulty with that section. There have been virtually no public complaints either before or after the 1986 Act, except from councillors of the opposition party, whatever colour that may be.
However, if the 1986 Act has not restricted what local authorities can say in their publications, it has, as has been admitted by professionals throughout local government, affected the quality of publication. As a result of the 1986 Act, one cannot produce the glossy, high-quality, eye-catching material that would invite the reader of the Sun to explore the relevance to him of local authority services and standards. Local authority publicity has become more bureaucratic and less attractive and accessible. It is therefore important for the Minister to help us in that area. First, she must clarify that we can have a wider rather than a narrower definition of the word "publish". Secondly, she must ensure that the 1986 Act, which restricted the notion of what the word "publish" might mean and what it could be attributed to, does not hinder the efforts in good faith of local government across the board to make available information in the most accessible way. That is what lies at the heart of the Citizen's Charter. I beg to move.
The Earl of Balfour: I wonder whether, in view of the wording of the amendment, we shall end up with a duplication. I am thinking particularly of one example. If Committee Members look at the bottom
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of page 2 of the Bill, they will see a reference to internal drainage boards. The wording of the amendment may lead to duplication.
Baroness Hollis of Heigham: What the noble Earl might call a duplication would, in my opinion, considerably widen access to information. As someone who has been involved in drawing up material that goes out to electors and local taxpayers, I have to say that the literature is not always the most accessible, sexy or attractive of reading materials. It is too often binned. If, by repeating it not just formally through the newspapers but by duplicating it through door-to-door leaflets, we enable the citizen to have a greater awareness of and control over events in city hall, that is money worth spending. It is perhaps worth reminding ourselves that at present only 0.1 per cent. of a local authority's budget is spent on publicity. We are talking about fractional costs, so I hope that the noble Earl might decide to support the amendment.
Baroness Hamwee: I support the amendments. I was struck by a comment made in an AMA publication by councillor Chris Willmore that,
"a local authority now appears to have wider powers to make information available 'on application' than it does by use of its own initiative".
This is in the context of the Local Government Act 1986.
We all know how important information published by local authorities and by many bodies disappears into the small print of the rather boring columns which, on the whole, people do not have the time or inclination to read. Although I have an instinctive dislike of prescribing the means of dissemination, it must be said that newspaper advertisements are a fairly inadequate means. There is an important point in ensuring that information gets round as widely as possible, as the noble Baroness, Lady Hollis, said. It is not just that the public should know. But when they know, they are enabled to make a greater input into the process by reacting to the information that they are given. I support the amendment.
Lord Peyton of Yeovil: I hope that my noble friend will resist the amendment. The Bill already provides for sufficient information through advertisements in a local newspaper and documents available in council offices for those who are interested to read them.
There is a suggestion behind the amendments that there are hosts of people hungry for information from local authorities. I believe that it is easy to exaggerate that number. I wish to make a modest comment on the amount of paper flowing from official sources today. If my noble friend can do her bit to resist the temptation to add to that inundation, she would be deserving of our gratitude. She would certainly have mine.
Baroness Denton of Wakefield: I too support rejection of the amendment. The noble Lord, Lord McIntosh, has already drawn our attention to the different types of local authority—urban and rural. Is it not true that they will know best how to reach their audiences? An important sector involves persons who travel to work in the area and have cause to use the services. The amendment totally ignores their needs. If

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we prescribe specifically that local authorities use those methods, do we not leave them without the capacity to use a more open method of communication?
Lord Skelmersdale: Although I accept that the more information given, and the more widely disseminated it is, the better, is there not a danger that such information may not be read? I have some experience of mail orders. I am sure that all Members of the Committee have received many advertisements, leaflets and exhortations on pieces of paper accompanying the publication that they wish to read. I suspect that, like me, noble Lords put such paper straight into the wastepaper basket.
It is important that there should be a brief synopsis with ratepayers' or chargepayers' annual charge sheet but that it should not go into such detail as does, for example, the Audit Commission pamphlet which the noble Lord, Lord McIntosh, held up a few moments ago. While I sympathise with the amendment, I am not sure that that is the way to achieve its objectives.
Baroness Blatch: Amendments Nos. 12 and 14 would set up a totally artificial and unnecessary distinction in the way in which information is made available to different classes of person.
The authorities can publish elsewhere. Many send extra information with bills. Many publish detailed annual reports. Indeed many send so much information that it confuses the electorate. I am happy to inform my noble friends that the important factor is to get information out in a digestible form to all the people and not to differentiate between one class of person and another.
With regard to bodies publicising information, I cannot understand why households or residents who are the target of Amendment No. 14 should not be made aware of the information in the same way as the local electors. The publicity arrangements required by the Bill as printed seem perfectly adequate for all classes of person. There is no need to distinguish between different classes of person; and there is absolutely no need to set up different ways of publicising the information. The only result of such distinction is to add to the costs; and that is important.
The objective is to make sure that the information is in the public domain in an understandable form, and where it can be explored and made sense of by local people. I hope that the Committee will reject the amendment.
5.15 p.m.
Baroness Hollis of Heigham: I am disappointed by the response by the noble Lords opposite, including the Minister. The noble Lord, Lord Peyton, did not believe—he may well be right, and I would regret it—that there are hosts of people hungry for local government information. The objective of the amendment is to make them hungry for that information so that they become not only consumers of services but citizens of the services which local authorities are empowered and mandated to provide. That is the thrust of the amendment. The noble
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Baroness, Lady Denton, considered that the amendment might be unfair to those who did not live in the area but worked there.
Lord Peyton of Yeovil: Perhaps I may lift a quotation from quite another source:
" … that surfeiting,
The appetite may sicken, and so die".
Has that occurred to the noble Baroness?
Baroness Hollis of Heigham: The noble Lord may have had more experience than me of rich dinners. I would not care to cross swords with him on that. However, local government is local government and not local administration, because it is sensitive and responsive to informed citizens and informed tax and charge payers. All sides of the Chamber surely share that view.
Perhaps the only justifiable argument that might have been raised against the amendment is that it produces too much additional paper at too high a cost. I suggest that neither of those arguments is true. Most city authorities produce, for example, hand delivered newspapers on a monthly basis. Leaflets go out with bills. Annual reports are available to citizens on request in city halls. Leaflets are available in local community centres which people take home. If the amendment were accepted, it would be empowered that those leaflets carry the information about standards that the local authority seeks to meet. The amendment is necessary because it is not clear whether local authorities which acted in what seems a sensible way might run foul of the 1986 Act.
If the Minister will say that local authorities, using their discretion, who wish to convey this information in such literature which is currently circulated—it seems a sensible way to inform local residents—will not run foul of the 1986 Act, I shall be content. Perhaps the Minister will briefly respond.
Baroness Blatch: There will be a requirement on the face of the Bill for local authorities to publish information in an accurate form and that should be in the public domain. That does not rule out other ways of producing the information. Local authorities will be able to choose. The requirement on the face of the Bill is for accurate information to be in the public domain and in a way in which local people can make sense of it.
Baroness Hollis of Heigham: I beg leave to withdraw the amendment. I shall consider whether we wish to raise the same issue at a later stage.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 13:
Page 2, line 4, after ("body") insert ("for the information of electors entitled to vote in annual local elections introduced in accordance with recommendations made under section 13(1A) below.").
The noble Baroness said: I shall speak also to Amendments Nos. 138, 146, 184 and 237. I hope that we shall have the indulgence of the Committee with regard to the grouping together of a large number of amendments. The amendments seek to ensure annual elections in local government. At present the

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metropolitan districts have annual elections, as do 40 per cent. of shire districts. We seek to extend that arrangement to all appropriate local authorities. Clearly county councils are not such appropriate bodies.
Why do we seek to do that? This is the point at which a concept of the Citizen's Charter and concern with customer contracts—that is, services monitored and scrutinised by local people—meet. Annual elections ensure that local taxpayers through customer contracts help local authorities to draw up their performance standards, and scrutinise those customer contracts through the medium of the Audit Commission and the value for money principle which results. Through annual elections electors can also make a judgment about the three "e"s—economy, effectiveness and efficiency—that local authorities are required to achieve. If, as a result, they are dissatisfied with their local authorities they can change their elected representatives. In other words, annual elections would turn customers into citizens. Performance leagues and standards cannot mean much as a democratic and financial tool of the taxpayers if they can pass judgment on them only once every four years. The amendment would give local taxpayers powers beyond their purchasing capacity and there would be additional democratic rights.
Last year we discussed the planning and finance legislation. An argument was then put forward for local annual elections. It was said that after the all-out elections in 1990 the budgets of London boroughs rose by only 6 per cent. In other words, the all-out elections proved to be highly cost effective as a budget control. The county and district councils which did not have annual elections were simultaneously raising their budgets by 13 and 14 per cent. respectively. It is clear that annual elections increase the accountability of local government to its taxpayers. The same could and should apply to performance standards. I accept that annual elections do not always sharpen accountability but they are more likely to do so than elections spaced every four years. I was at one stage simultaneously a district and county councillor. I assure the Minister that in such a situation annual elections have a wonderful effect of focusing the mind on both budget and service accountability, compared with one's experience as a member only of a county council.
The Minister may argue that ours are not single-issue elections and that that would be unreasonable. That would be to misunderstand the purpose of performance standards. We say that at the core of the issue is the delivery of services. If the Bill is to be meaningful local taxpayers must have the possibility of passing annual judgment on annual performance. That is the purpose of this and all related amendments. I beg to move.
Lord Tordoff: Members on these Benches do not object to the amendment, although we believe that there are better ways of making local authority representatives more accountable through changes in the electoral system. However, I shall not discuss that matter in detail at the moment. The issue stems in part from the fact that it is possible to change the complexion of the council only once every four years
46
even though the percentage of the electorate supporting the majority of the council is less than 50 per cent. Many councils are not fully representative of the people. Indeed, my noble friend Lady Hamwee is a member of Richmond Borough Council on which one party is grossly over represented. There the quirks of the electoral system come down in favour of the Liberal Democrats, the Labour Party has been totally unrepresented for many years and the Conservative Party is now grossly under represented. The amendment will not sort out that problem. However, we do not object to it as a means of ensuring an interim judgment on councillors who are not totally representative of the wishes of the electorate.
Baroness Blatch: There is almost a kind of arrogance about the amendments. The noble Baroness chooses to pre-empt the consultations which are only just at an end. The detailed results have not yet been properly considered. The amendment is certainly highly prescriptive, which runs counter to everything that we wish for local authorities. It is without consultation and it fits the expression used by the noble Baroness, Lady Hamwee, of being the dead hand of uniformity.
Members of the Committee will be aware that a variety of electoral arrangements is in force in the various types of councils in England. In county councils there is one member for each electoral division. Elections are held every four years and all the seats are contested simultaneously. Metropolitan districts have three members per ward. Elections are held in three years out of four with a third of the seats contested at each election. In shire districts wards can have one, two, three or more members. Elections are either of the whole council every four years or, as in about one-third of councils, by thirds. In the case of by-third elections, they are held in three years out of four. Therefore, where there are fewer than three councillors in a ward, elections can be every two or four years. In London boroughs elections are held every four years. Most wards have three members but a few have only one or two.
The Government have invited views on the local authorities' electoral arrangements. That was announced in the consultation paper on the internal management of local authorities published in July. The consultation period ended last Friday. We have begun to analyse the responses although some are still arriving. The Committee will appreciate that that will take a little time and it is presumptuous to pre-empt the results of that. The proposed amendments—
Baroness Seear: In that case, is it not presumptuous to be legislating at all?
Baroness Blatch: No, because it falls in nicely with the work of the Local Government Commission which will take into account and discuss with local people electoral arrangements for the new or existing authorities that will be confirmed as a result of its work. The proposed amendments will have the effect of standardising all principal councils to the arrangements applying in the metropolitan districts. I am sure that Members of the Committee will agree

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that such a change will be premature. We must first consider the responses to the consultation paper and ask the new Local Government Commission to consider electoral arrangements as part of its review of local government. Only then shall we be in a position to say whether there is a case for standardising electoral arrangements and, if so, what those arrangements should be. There might well be a basis of support for those proposals. I ask the Committee to reject the amendment.
Lord Stoddart of Swindon: The Minister accused my noble friend of being arrogant. It is not arrogant to try to put forward a means by which local authorities can be supervised by the electorate on a basis more frequent than every four years. That was the basis of the amendment. I have had experience in local government as the leader of a county borough and chairman of its finance committee. I can assure the Minister that the discipline which annual elections imposed upon me and upon the local authority was most serious. It ensured that every year the council took into account the effect that its actions would have on the electorate. It also gave the electorate the opportunity to change the council on an annual basis —certainly less than every four years—so that real democracy was at work.
In my experience, such a situation keeps the party machines in operation. It ensures that local councillors and others visit their electors every year instead of every four years. In that way they are enabled to collect annually the views and the opinions of the electorate. I believe that the Minister used the wrong word in applying arrogance to my noble friend Lady Hollis. I urge the Minister to think again in spite of what she said about the consultation document. After all, we shall pass this Bill before the results of another consultation document come into effect. I should have thought that if anything were arrogant it was that situation. I hope that the Minister will listen to the arguments put forward by my noble friend. I hope that the Minister will understand that if she and the Government wish to impose some discipline on local authorities they should give the local electorate a better chance to have some effect and some sway over its local authority. That will happen if elections take place more frequently than every four years. She should give a sympathetic reply to the amendment, although I appreciate that she may not be able to accept it.
5.30 p.m.
Baroness Hamwee: I wish to take up a matter raised by the noble Lord, Lord Stoddart of Swindon. In associating ourselves with the amendment and the proposal for annual elections, we on these Benches do not suggest that local councillors should be in touch with their constituents only on an annual basis. Some of us are in touch with them on a weekly or even daily basis. I am sure that the noble Lord did not mean that for a moment.
Lord Stoddart of Swindon: There is no doubt that there are some extremely good councillors. However,
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some believe that once they are in office all they need to do is sit in committee rooms and make decisions. Annual elections impose a discipline upon those sorts of councillors because the party and the councillors must then go out to meet the people if they are to retain office.
Baroness Blatch: I have far too much respect for the noble Baroness to attach the word "arrogant" to her as a person. These amendments totally disregard the results of the consultation paper. They do not even allow the Local Government Commission to be set up, to take its course and do its work or to take soundings from the local community. I believe that there is an arrogance in saying that before any of that work is completed, Parliament should determine and impose annual elections on local authorities.
We should allow the results of the consultation to be properly considered. We should allow the Local Government Commission to be set up so that it can sound out voluntary groups, local communities, local authority members and associations. At the end of that, Parliament will consider recommendations from the Local Government Commission on the basis of that evidence. At that time Parliament should decide whether local elections are the best and most effective way forward. I ask for time for the proper democratic process to take its course.
Baroness Hollis of Heigham: I should say to the noble Lord, Lord Tordoff, that I accept that this amendment is not about proportional representation, although no doubt the noble Lord wishes it was. It is not meant to be and that may or may not be on a ' future agenda. Nevertheless, I accept his coded support for what it was.
I thought that the Minister's second contribution—if I may be so arrogant—was rather more helpful than the first. In that first response she described the amendment as "arrogant", "prescriptive" and the "dead hand of uniformity". Those descriptions come from a government who have imposed the poll tax and are imposing rate capping across the country on the basis of standardised SSAs with single variables. That is somewhat rich.
Secondly, the noble Baroness said that it is arrogant and presumptuous because the results of consultation have not yet been received. This Bill gives to the Secretary of State 16 more powers and we do not know what any of them will mean. In some cases that is before we have received the replies of the consultation paper, and the consultation paper on housing has not even been issued. The Minister uses a perverse form of language when she describes our amendment which seeks to strengthen the hands of local electors to scrutinise what takes place in town hall as arrogant, presumptuous or prescriptive. I find that unfortunate to say the least.
We may wish to return to the subject of annual elections but it may be prudent to await the completion of consultation procedures. However, I take strong exception to the language used by the Minister, which I believe was extremely ill judged.
Baroness Blatch: The comment that I made was not against the noble Baroness personally but against the amendments. Secondly, the regulations to which the noble Baroness referred which flow from primary legislation in this Bill will be for Parliament to approve at the end of the day. By asking the Committee to accept these amendments the noble Baroness is asking for primary legislation, which gives no opportunity whatever for consultation to take place. I merely ask for time to allow the democratic process to take its course.
Amendment, by leave, withdrawn.
[Amendments Nos. 14 and 15 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 16:
Page 2, line 46, leave out paragraph (h).
The noble Baroness said: This amendment seeks to include passenger transport executives within the scope of the provisions, bringing them within the aegis of the Audit Commission and subject to the same performance standards and criteria as local authorities.
The amendment is an excuse to express the feelings of many people that passenger transport executives are but a mere apology for metropolitan strategic government. They are a means devised and put into place as a poor second best for proper control of one of our most important services; that is, transport and transportation.
I have a certain dislike—almost repugnance—for the fact that unelected organisations such as this should be in a position in which they are not subject to the same scrutiny as local authorities. The functions of passenger transport executives would be carried out better by elected bodies. As we are not able to have that, I ask the Minister to consider whether they should be under the same sort of scrutiny.
Lord McIntosh of Haringey: I support the amendment. I am sorry that the noble Baroness did not move Amendment No. 15 because her arguments apply as strongly to health service bodies as to passenger transport executives. By listing all those bodies the Government are in a sense admitting the range of bodies which have been taken away from local democratic control and put under the direct control of central government. To have the nerve then to take them out of the Citizen's Charter provisions seems to memberconstituency—and I use the words of my noble friend Lady Hollis—a bit rich.
Baroness Blatch: I hope that I can be helpful to the noble Baroness. The Bill already applies to the metropolitan county passenger transport authorities. The executives operate under the direction of those authorities and the Government are content that through that channel the Bill will provide sufficient access for local taxpayers to information about standards of local public transport administration. Therefore I confirm that the executives will be subject to the provisions of the Bill.
Baroness Hamwee: I thank the noble Baroness for that reply. I am sure she will understand that we wish to reserve our position and perhaps return to the matter at Report stage.
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I apologise to the House for tabling but not moving Amendment No. 15. I tabled it for the reasons to which the noble Lord, Lord McIntosh, referred. However, on further consideration I felt that there were other occasions on which to discuss the application of the Citizen's Charter to the health service. I beg leave to withdraw Amendment No. 16.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2 [Directions under s.1]:
[Amendment No. 17 not moved.]
Deputy Chairman of Committees (The Earl of Listowel): Before calling the next amendment I should point out to the Committee that if it is agreed to I cannot call Amendment No. 19.
[Amendment No. 18 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 19:
Page 3, line 18, after ("shall") insert ("(a)").
The noble Lord said: In moving Amendment No. 19 I shall speak also to Amendment No. 20. I would not normally be tempted to move an amendment of this nature were it not for the incredible wording to be found in the Explanatory and Financial Memorandum. Referring to the financial effects of the Bill it blandly says,
"The measures in clauses 1 to 7 are not expected to cause any significant increase in public expenditure".
No significant increase in public expenditure! Local authorities which comply with the conditions of Clauses 1 to 7 will certainly incur additional costs. They will need to improve and change their information systems to enable them to produce nationally comparable information. Above all, it may not be generally realised that the Audit Commission will have to be paid for by audit fees raised by local authorities. They will have to pay the increased audit fees to cover the auditors' work in checking the new information and the increased audit fees to finance the Audit Commission's enhanced role in Clause 3(2).
I do not believe that the Audit Commission thinks for a moment that those additional responsibilities, worthwhile though they may be, will be carried out without cost. As that cost will fall on local authorities it will be public expenditure. The financial memorandum is wrong. I beg to move.
Baroness Blatch: Amendments Nos. 19 and 20 would impose an additional administrative burden on the Audit Commission to little effect. In practice, any cost to local authorities will be negligible—at least, it will be negligible if the Government's proposals are accepted. The noble Lord, Lord McIntosh, has been imploring us this afternoon to accept some bureaucratic amendments. If we were to accept those proposed thus far and the many more to come tabled by noble Lords opposite, I should have to agree that the cost would be excessive.
Well run authorities will already have systems for monitoring performance and any adaptation necessary will be minimal. The fact that information will be put out in a common format should make life easier and not more difficult. Monitoring of performance

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may itself lead to improved value for money. I strongly urge that the amendment, which I believe to be unnecessary and unworkable, be resisted.
Lord McIntosh of Haringey: Has the Minister thought that there may be further effects of the provisions in Clauses 1 to 7? Where local authorities are shown to be underspending and underproviding it may be that local residents will bring pressure upon them to provide an improved service, if necessary at an improved cost. That is something which should not be ruled out of consideration. It would certainly involve an increase in public expenditure.
The Minister has in no way reassured me that the Audit Commission will not incur substantially increased costs under the government provisions in the Bill. It is a red herring to refer to the amendments already moved, even if the noble Baroness was right about them, which she is not. I am totally unconvinced that the financial memorandum accurately reflects the costs of the provisions of the Bill. It may be a matter to which we shall return at a later stage. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 20 not moved.]
5.45 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 21:
Page 3, line 19, at end insert:
("(3A) In the case of any direction under section 1 above which imposes a new requirement on a local authority, the Audit Commission or Scottish Accounts Commission shall consult the local authority associations in England and Wales or, as the case may be, Scotland.").
The noble Lord said: Amendment No. 21 is a relatively minor amendment. However, it seems to us to be peculiar that the wording of the Bill should state, unusually, that,
"the Audit Commission or Scottish Accounts Commission shall consult such associations of relevant bodies and such other persons as it thinks fit".
Even bearing in mind the Minister's own responses to earlier amendments, I thought it was well accepted that local authority associations reflected the views of their members of all political parties and of none. It is therefore a proper and a good precedent for including the need for consultation with local authority associations on the face of legislation affecting local government. I beg to move.
Baroness Blatch: Amendment No. 21, as the noble Lord said, specifies that the Audit Commission and Scottish Accounts Commission shall consult the local authority associations before giving directions. As printed, the Bill already contains a requirement for the commission to consult associations of relevant bodies as they see fit. As the definition of "relevant bodies" includes local authorities, their associations will be consulted wherever relevant. It goes without saying that in different cases it will be appropriate to consult different bodies. Rather than specifying in any particular case which bodies are to be consulted, I believe that it is sufficient to rely on the good sense of
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the commission to consult those that they feel are the appropriate ones in each case. I ask that the amendment be rejected.
Lord McIntosh of Haringey: So the Minister says and I believe her. But that is not what the Bill says. The Bill says,
"such associations or relevant bodies and such other bodies as it thinks fit".
Therefore the Audit Commission and the Scottish Accounts Commission are totally free to consult anyone they like. Of course, under the 1982 Act they can be given directions by the Secretary of State on any subject and shall give effect to those directions. However, save for that provision, on which the noble Lord, Lord Cockfield, rightly rebuked me, the Audit Commission does not need to consult the local authority associations.
I am sure that the Minister is right; if they are wise they will wish to do so. However, for the life of me I cannot see why on this occasion and only on this occasion they should be free not to consult the associations which can most help them. The Audit Commission expects local authorities to give "helpful advice". We must not forget that it has the power to direct local authorities on all the matters contained in these clauses in the Bill. It is quite unsatisfactory that the Government should go out of their way to deliver this unwarranted snub to local authority associations. The point has been made. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 22:
Page 3, line 22, leave out ("31st December") and insert ("30th June").
The noble Lord said: Amendment No. 22 concerns a practical point. As the Bill is drafted, the Audit Commission in Clause 2(4) specifies the last date for giving new requirements to local authorities on the publication of information as 31st December in the financial year preceding that in relation to which the information is to be published. That means that local authorities may have only three months between 31st December and 1st April—the new financial year—in which to give effect to the directions of the Audit Commission.
I have no doubt that we shall be told, as we were told in relation to the last amendment, that the Audit Commission will seek to give as much notice as possible. I am sure that is the case. But, sadly, experience has shown that when central government give directions to local authorities and impose restrictions on them, which they are doing all the time, they tend to do so as late as possible. The example of the rate support grant being announced only last week is a very good one. The classic example is that of capping which is made known only very late in the budgetary process of local authorities.
I do not accuse the Audit Commission of any ill-will because I am sure that it will give good notice whenever it can. However, would it not be a wise precaution, in case any future Audit Commission were not as well meaning and efficient as the present one, to

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provide on the face of the Bill that there should be adequate notice in order to enable local authorities to give effect to the directions? I beg to move.
Earl Howe: As we have heard, Amendment No. 22 seeks to extend the minimum time which local authorities have to prepare for complying with new directions from three months to nine months. Three months should normally be quite sufficient to prepare for collecting and recording such information. But the three-months' period is in any case only a minimum. The Audit Commission will be able to give a longer time if it feels that it is necessary. It is quite possible that in its good judgment, as the noble Lord, Lord McIntosh, has said, it will do so on some occasions depending on what is reasonable in the circumstances. I hope with that reassurance the noble Lord will withdraw his amendment.
Lord McIntosh of Haringey: It can hardly be a reassurance because I anticipated almost word for word what the noble Earl was going to say. Of course the Audit Commission will give longer notice if it can. The members and staff of the commission are people of the utmost goodwill just as Ministers are. That does not relieve us of the responsibility of seeing to it that legislation can be enforced. It does not relieve us of the responsibility for thinking, as the noble Lord, Lord Tordoff, or the noble Baroness, Lady Seear, suggested, that there might be a much worse Minister like me around who would behave very badly towards local authorities and give them the minimum time to implement my directions. They would have no protection from somebody like me under the provisions of the Bill. I suggest that the purpose of legislation is to see to it that all Secretaries of State shall be required to behave properly and not just the present Secretary of State. I gladly give way.
Earl Howe: Perhaps it may be helpful to the noble Lord if I make two points. The first is that the consultation process itself will enable local authorities to see what they are likely to need if and when directions are given. The second point is that the commission has to satisfy itself as to whether the systems and procedures are in place to fulfil the directions that are given. Initially these directions will build on the performance measures that are already in place.
Lore McIntosh of Haringey: I accept the validity of the second point; but the first point is sharp at both ends, if I may put it that way. If the noble Earl is correct when he says that it is evident from the consultation document to local authorities what is going to happen, that means that the consultation process is not being taken seriously. If one looks at the range of options contained in the White Paper Competing for Quality, it will be seen that very little guidance is given in that consultation document as to what decision the Government will ultimately reach on compulsory competitive tendering. That is why we shall have such a laborious process in seeking the Government's views and attempting to restrict their powers later this evening and tomorrow.
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The point had to be made. It would be unreasonable if the Audit Commission did not take precautions which it is not required to take. It would be better if it were required to take them and if that was stated on the face of the Bill. It would have been better if my amendment had been accepted. Sadly, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 23:
After Clause 2, insert the following new clause:
("Internal management of local authorities
.—(1) This section has effect for the purposes of assisting local authorities to—

(a) maximise the economy, efficiency and effectiveness of their services, and to achieve the highest standards of performance in accordance with the needs of their areas as required to be published under section 1(1) above;

(b) fulfil the requirements of sections 5 and 6 below;

(c) fulfil any requirements arising from orders or regulations made under sections 8 and 9, or from section 10 or Schedule I below, in the most appropriate and effective manner in the interests of their areas;

(d) fulfil any requirements or activities, whether arising from paragraph 4 of Schedule 2 or otherwise, arising from the provisions of Part II to this Act.

(2) Subject to any statutory provision, a local authority may organise the internal management of its affairs as it considers appropriate having regard to the needs of its area.
(3) For the purposes of this section, the internal management of a local authority shall he taken to include the structure of decision-making within an authority, and arrangements for support to the work of elected councillors.
(4) Before issuing any guidance under subsection (5) below, or making any order under subsection (6) below, the Secretary of State shall consult the local authority associations and such other persons as appear to be concerned.
(5) The Secretary of State may issue guidance for the purposes of informing local authorities as to the effects of the power contained in subsection (2) above.
(6) The Secretary of State may by order provide for an activity of a local authority to fall within subsection (1) above by adding a paragraph to those for the time being appearing in that subsection.
(7) The power to make an order under this section shall be exercisable by statutory instrument; and no such order shall be made unless a draft of the order has been laid before, and approved by a resolution of, each House of Parliament.").
The noble Lord said: In moving this amendment, I speak also to the consequential Amendment No. 228. This new clause is in effect in response to the Government's own Green Paper on the internal management of local authorities in England. On the face of it it may seem curious that in this amendment we are seeking to specify the way in which the internal management of local authorities should take place. In subsection (5) we even provide that,
"The Secretary of State may issue guidance for the purposes of informing local authorities as to the effects of the power contained in subsection (2) above".
There is good reason for that. The Government's Green Paper rightly said that local authorities should be able to experiment with different forms of internal management subject to central government's approval. I exempt that last phrase from the words "quite rightly". I believe that the criticism of local authority committee procedures is that they are

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sometimes time-consuming and cumbersome and blur the executive and constituency roles of government. That statement is made in the Green Paper and it is often true.
It is certainly true that local authorities find it very difficult to act flexibly outside sometimes protracted committee cycles. It is certainly true that the ways in which committees take detailed decisions means that individual councillors are confusing the roles of managers and representatives of the electors. It is also certainly true that local authorities should be seeking more flexible ways of dealing with these matters. Perhaps I may praise a Liberal Democrat council. The neighbourhood structure of Tower Hamlets council is an example that should be followed more widely. It has groups of people representing all the different interests and departments in a particular community. They are not organised to set one department or one chief officer against another. I believe that the system there works well and I wish more people would follow it.
The danger contained in the Green Paper is in the phrase, which I did not endorse:
"subject to central government's approval".
The great fear is that the Government are going to seek, not least by the privatisation of the corporate strategy function of local authorities, to control the ways in which they operate rather than assist them to operate in ways which are most suitable for efficiency, economy and effectiveness. The introduction to the new clause is,
"This section has effect for the purposes of assisting local authorities to
(a) maximise the economy, efficiency and effectiveness of their services".
The amendment seeks to bring that closely into the structure of the Bill at many points. There is no doubt that the way in which the internal management of local authorities is organised is absolutely critical to their ability to deliver services effectively, economically and efficiently and also to deliver services of high quality. We recognise and welcome the role of the Secretary of State and of the Audit Commission in that process. However, ultimately local authorities must do what is appropriate for their local circumstances. By bringing the matter out into the open and putting it on the face of the Bill, this new clause will clear up a threat which exists in the wording of the Green Paper and which could be implemented by order without specific parliamentary approval. I beg to move.
6 p.m.
Baroness Blatch: I am most obliged to the noble Lord, Lord McIntosh, first, for his support which is implicit in his proposed new clause for the provisions in the Bill. I also welcome the enthusiasm for improvements to local authority services' internal management arrangements. The Committee will be aware that in July this year the Government published a consultation paper on the internal management of local authorities. As I said earlier, the consultation period ended last Friday. The paper has generated a considerable amount of interest. The department has
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so far received about 500 responses; and I know that there are others still in the pipeline. The department has already begun to analyse these responses to the consultation paper, but given the complexity of the issues involved and the wide range of the responses received, this analysis will inevitably take a little time.
The Government will come forward with the results of the consultation exercise in due course and their proposals for taking the issue forward. The present legislative arrangements allow local authorities quite wide discretion in the ordering of their affairs. I am aware from my own local government experience that many councils have already made changes to the way in which they manage their affairs and they would not wish to go any further. Others consider that they would wish to go beyond the constraints of the existing legislation and to introduce quite novel arrangements. The noble Lord, Lord McIntosh, has already referred to one local authority which has introduced a unique arrangement. Some of these were discussed in the consultation paper. They include delegation to committee chairmen; the formation of executives of elected members; and even directly-elected mayors. These arrangements are not permitted by the existing legislation governing the management of local authorities.
The consultation paper also discussed other issues such as whether some councillors should be paid on a salary basis and whether there should be additional administrative support for councillors. The latter is a point which I notice is referred to in subsection (3) of the proposed new clause. The paper also stressed the importance of proper safeguards against the abuse of power if new management models are to be introduced. That is an important point and is certainly a point which was made at Second Reading.
I am grateful to the noble Lord for introducing this amendment which has allowed us to discuss that important subject. However, I have to say that I believe the amendment is premature in much the same way that I thought the previous one was premature in that it pre-empts the results of the consultation process and it pre-empts further debate. We need to analyse the responses to the consultation paper and come forward with properly thought out proposals as soon as possible. We shall discuss our ideas with local authority associations and shall welcome their participation in this important area. In the meantime, I hope that the noble Lord, Lord McIntosh, will agree to withdraw this amendment.
Lord McIntosh of Haringey: I cannot resist saying that to hear the Minister say that we are pre-empting the results of consultation is—to use words that will have to be used again—a bit rich. We are proposing to pre-empt the wrong response to the consultation paper. It is not as if there are not bad examples of central government wading in and interfering with the internal operations and finances of local authorities. The Local Government and Housing Act 1989 is a very good example of that in the way in which it imposes very precise restrictions on how a local authority should implement its housing finances.
I am afraid that despite the Minister's description of the Green Paper and the consultation process and

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the nature of the responses to it, that the reaction of the Government, given the Government's track record in these matters, will be to lay down the law to local authorities. The purpose of this amendment is not to lay down the law, not to pre-empt the consultation, but to make sure that the response to the consultation is not proscriptive but is instead facilitating. The intention of the amendment is to assist local authorities to maximise the efficiency of their operations and not to lay down exactly how they should do it.
Despite the friendly tone of the Minister's reply, I am tempted to seek the opinion of the Committee on the matter. I shall not do that because it occurs to me that an alternative might be to add this to the functions of the Local Government Commission and we night do that by Thursday. I shall consider that matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Functions of auditor and studies by the Commissions.]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Page 3, line 47, at end insert ("and that the body have made proper arrangements to secure the views of users of services on their performance").
The noble Lord said: In speaking to this amendment, I shall speak also to Amendment No. 25. The amendment refers back to a theme which runs through our approach to this part of the Bill. We are proposing that as the national standards are prescribed, or indeed as local standards are proscribed—I shall not go back over the issue of levels of service again—that there should be adequate consultation not merely as between the Government, the Audit Commission and local authorities, but also users of the services and persons representing voluntary organisations. The consultations should cover desirable levels of service, the national standards applicable where they are applicable—those are my words—and the comparative performance of local authorities.
It is not our intention to depart in any way from the thrust of the Government's move towards the application of the Citizen's Charter. We are trying to make sure that customers are actively involved, and providers of voluntary services are involved in the process. We are not alone in this. This year the Audit Commission published a document called How effective is the Audit Commission? One of the considerations to which considerable attention is paid at page 24 is assessing customers' views. The commission says that this will be a priority area in the next few years. The commission thinks it is more likely to be effective when it can provide tools for use by those responsible, and what it needs is something comparable in local authorities to the assessment of patient satisfaction, which is part of its responsibilities for the health service.
Once again I make no apology for using the analogy of the health service. It seems that in these matters the health service has adopted a much more
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realistic approach to local and national standards, and a much more realistic view of assessing patients' views, users' views, of the health service.
It may be said that it is easier for the health services to identify users than it is for local authorities. After all, the users of health services come to hospitals or doctors' surgeries. I do not deny that. However, there are methods of contacting users, including the much despised survey method for which the Minister does not seem to care. There are also methods of assessing customers', users' and residents' perceptions of value for money which are well established and which are used in private industry quite widely. I suggest to the Government that to accept Amendments Nos. 24 and 25 would not in any way depart from the purport of this part of the Bill. They would instead add a new dimension which would make the application of the Citizen's Charter more effective than it would otherwise be. I beg to move.
Baroness Hamwee: I support this amendment and Amendment No. 25. The words that I am about to use are not mine but they express the position better than I can.
In local authorities we should reverse the doctrine of professional infallibility, and we should be creating service-led organisations, not organisations which are producer-led. These two amendments refer to the views of users of the service. They are the most important people. They are the clients and are the people most affected by the way in which any service is delivered.
The second amendment refers also to representatives of the voluntary organisations. Local authority services are increasingly delivered not directly by local authorities but by others; not necessarily directly on their behalf but covering the same subject area. I do not for a moment suggest that that should not be so. The work of voluntary organisations is tremendously valuable. Indeed, in many cases it is probably better than could be delivered direct by local authorities. However, we must recognise that we are imposing on voluntary organisations the most enormous responsibilities, and imposing them when their resources are decreasing pretty much in line with the decreasing resources of local authorities. I have so often heard the suggestion that if a local authority cannot cope with a service the voluntary organisations will pick it up. We should not find ourselves in that situation.
I hope that the Committee will support the amendment. Many Members of the Committee have links with voluntary organisations. They will be aware of the value of their services and would want them to be recognised formally in the legislation.
Baroness Blatch: The noble Lord, Lord McIntosh, attempted earlier to persuade us to amend Clause I so as to require each local authority to carry out surveys of local residents' views on the standards adopted and the performance achieved by the authority. Amendment No. 24 would then require the auditor to check that the authority had proper arrangements in place to fulfil that new duty. As the noble Lord did not succeed in persuading the Committee to make the earlier amendment, there is little point in this one.

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Indeed it is pointless to require the auditor to certify that an authority has made certain arrangements when it is under no duty to do so.
Clause 3, as it now stands, is concerned with what I may call relatively "hard" information about the standards which an authority has achieved. In principle the auditor should be readily able to see whether or not the authority's systems are up to this task. But what I may call "soft" information about the views of users is quite another matter. What exactly is it that the auditor would be expected to check? That surveys had been carried out?—surely not. It would have to be more than that—certainly to be on the face of the Bill. The survey would have to be a "proper" survey, whatever that may mean. It would have to be universal, or based on a representative sample. The questions would have to be relevant, well framed and unbiased. The survey methods would have to be appropriate. Those judgments are not the domain of the auditors. They are the domain of market researchers. It is entirely inappropriate to extend the audit function into this area.
Amendment No. 25 would require the Audit Commission to consult representatives of the users of local authority services before undertaking a study under this clause. So, whereas Amendment No. 24 would have effect at the local level, Amendment No. 25 is a roughly equivalent national provision. As regards consultation, I shall simply repeat the point I made earlier. The Commission is required by Clause 2(3) to consult such associations of relevant bodies and such other persons as it thinks fit. I hope I can reassure the noble Baroness, Lady Hamwee, that, where appropriate, that would include voluntary organisations. The noble Baroness made some important points about voluntary organisations. Their work dovetails with local authority services and, with community care on the horizon, will do so more in the future. Where appropriate this will extend to user groups which includes the voluntary sector.
However, Amendment No. 25 would extend the consultation to cover desirable levels of service and national standards. It is possible, from what the noble Lord, Lord McIntosh, said earlier, that I may have confused Members of the Committee in regard to whether I used the words "levels of service" or "standards of service". I hope that I did not confuse the Committee, but in case I did I shall put on record precisely what we mean. It is important to note that we are not prescribing levels of service. It will be for local authorities to determine their own levels of service. We are, however, asking the commission to develop yardsticks against which those freely chosen levels of service can be measured. The standardisation is the standardisation of the measuring stick against which freely chosen local levels of service will be measured.
We have been through all this already. This is not a Bill to prescribe national standards for local authority services. The standards of service to be provided are, and will continue to be, a matter for local judgment. I am sure the Committee will agree that that is how it should be. At other times it has been the constant refrain of noble Lords opposite that this
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Government have gone too far in usurping the powers and discretion of local government. I reject that allegation. Indeed I have been fighting a battle on this side of the Chamber for the freedom of local authorities to do just that—to determine their own levels of service. But I find it ironic that in this case at least the noble Lord sees hitherto undreamt of virtues in a centrally prescribed approach.
I am sure that many individual local authorities are already and will continue to be responsive to the demands of their local communities, including the users of local services and the local voluntary organisations. This Bill will ensure that the standards of service achieved by all authorities are publicly stated so that local people can see for themselves how well they are being served by their local council. But that is as far as we should go. I urge the Committee to reject the amendments.
6.15 p.m.
Baroness Faithfull: At this stage I wish to make a comment—no more than that —on the administration of the arrangements between local authorities and voluntary organisations. The financial position is extraordinarily difficult in that local authorities do not inform voluntary organisations until 31st March, if then, of what they will receive the following year, which starts on 1st April. The voluntary organisations have sometimes been forced to get rid of staff whom they do not want to get rid of and need not have got rid of had they known what they were to receive. I want to put that point on the record because it is one that needs to be considered.
Baroness Blatch: I am grateful to my noble friend for raising that point. It is not strictly to do with the amendment but it is one which the Committee should take seriously. It will feature very much in the structural arrangements for local authorities and the way in which one local authority relates to another and indeed to its community, which includes the voluntary sector.
Lord McIntosh of Haringey: One reason why local authorities may find it difficult to give an early answer to voluntary organisations is that they may be threatened with capping. If the knowledge of capping does not become available, as is likely, until February or March, there is little a local authority can do in terms of giving advance indications of non-statutory expenditure. The authority may be worried that it will be capped. I am not defending those authorities which delay unnecessarily, but capping is a major reason for delay, or could be next year.
Baroness Faithfull: This difficulty has been going on for years. It is not just connected with capping. The structure has been wrong.
Baroness Oppenheim-Barnes: I am not of the view that the amendments and the type of survey and audit that the amendments suggest are the way to tackle the problem but I beg my noble friend not to be sanguine about the user friendly aspect of local authorities. I can assure my noble friend that people are treated in a high-handed, cavalier and bureaucratic way; often

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by chief officers, often by their social workers and often by their psychiatric social workers and their heads of department.
When I represented Gloucester in another place one of my constituents had a heart attack in the housing department. It was brought on by the aggravation she experienced. I could give many more anecdotes which would wipe away any feeling of confidence about the way users are dealt with by departments and chief officers. Moreover, the way in which complaints can be made through the local authority ombudsman, which involve a county councillor making a complaint, is not always satisfactory. The county councillor is not always accessible and the local authority ombudsman has to apply to the very department which is being complained about for evidence to counter the points which have been made. Therefore, although I do not support the amendment, I do not think that we can be confident or sanguine about the status quo.
Baroness Blatch: I can give my noble friend an absolute assurance that I am far from sanguine. She has graphically illustrated some of the problems pertaining to local government. However, if she will forgive me, I believe that we are talking about two different issues. First, we are talking about whether we can put on the face of the Bill measures which would allow the Audit Commission power to dabble in what are sometimes a variety of ways in which local authorities can test opinion. Therefore, it is difficult to bring forward a standard provision which would apply to all local authorities.
Secondly, I believe that my noble friend made an exceedingly important point. In my view, the measures in the Bill taken as a whole will do more to expose the good, bad and indifferent practices of local authorities and put in the hands of local people information in a form which is sufficiently understandable for them to make judgments about whether they are receiving good, bad or indifferent service from their local authorities. I hope that this will be the beginning of the end of cavalier treatment and high-handedness—treatment, as my noble friend pointed out, which has been meted out by local authority officials, and indeed by some local authority members, to their electorate. As I said, I hope that we will see an end to such treatment. I take on board the point made by my noble friend, but so far as concerns this amendment I do not believe that it is the mechanism for securing that aim.
Lord McIntosh of Haringey: I am grateful to the Minister for what she said in elucidation of her earlier statements. If I may say so, I believe that what she has said now is what we understood the Bill to say. I am glad that we are now talking the same language and using the same phrases. I do not doubt that the noble Baroness fights for local independence; but I fear that she is fighting her colleagues in government rather than those of us on this side of the Committee.
When we consider the whole issue of consulting users and providers of voluntary services, I believe that we ought to look at what happens now and what is proposed under the Bill. At present local authorities
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pay for value-for-money studies. Such studies are carried out by the district auditor under the Audit Commission, and of course they are largely accountancy based; in other words, they are largely concerned with cost rather than customer satisfaction, quality of service or, for example—to return to the issue raised by the noble Viscount, Lord Mills—environmental impact.
That is all very well but it is not what I thought the Citizen's Charter was supposed to be about. Clauses 1 to 7 are an improvement on the position. They extend the range of issues to be considered from simply accountancy-based issues, although they are still largely to be devised by accountants within the Audit Commission. The reason we welcome much of the thrust of the Bill is exactly the extension of the considerations in the evaluation of local authority services. However, it still does not go far enough. The principal reason for that is that there is no real consultation with the users of services and with the providers of voluntary services, which, as the noble Baroness, Lady Faithfull, rightly said, are often more efficient than is the case with direct provision by local authorities.
Our whole thrust in talking about contracts in connection with earlier amendments was along those lines. The Minister said that I did not succeed in persuading the Committee. I am not proud of my powers of persuasion. But the noble Baroness knows as well as I do that the decision is taken by virtue of the number of people that the Whips can bring in rather than by my powers of persuasion. Therefore, I do not pay too much attention to that thrust of her argument.
There are ways of consulting users of services and of bringing in voluntary providers of services. In a paper published earlier this year, the Labour Party suggested that there should be local audit teams which could include an accountant, a representative of the district auditor, a service manager, other professionals and also representatives of consumers, and, indeed, consumers. I believe that "representatives of consumers" is perhaps something of a misnomer. There are ways of doing this on a local basis. Local authorities ought to have the power to experiment with ways of improving consultation with consumers other than at election time. Amendments Nos. 24 and 25 would make it more possible to do so.
I am sorry that the Government are still so set on the central government-Audit Commission-local authority tramline that they ignore those for whom the services are provided. Sadly, I beg leave to withdraw the amendment; but it is possible that we shall return to the matter at a later stage of the Bill.
Amendment, by leave, withdrawn.
[Amendment No. 25 not moved.]
Clause 3 agreed to.
[Amendment No. 26 not moved.]
Clause 4 [Application to parish and community councils and charter trustees]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 27:
Page 4, leave out line 31.
The noble Baroness said: In speaking to this amendment I shall, with the leave of the Committee, speak also to Amendment No. 28. As the Bill is drawn, it would allow the Secretary of State to bring parish and community councils within the provisions which we have discussed. I suggest to the Committee that we might go a little further than that and put it firmly into the arena of the parish and community councils in England and Wales that these are provisions to which they might like to be subject.
Amendment No. 28 would allow parishes to come into and be part of the system unless they opt out of it. The reason for that is that it would be, I suggest, an issue at local elections as to how parishes and community councils are running their affairs and whether they are scared of this sort of scrutiny or would welcome it. Our parishes carry out the most useful work. Although we by no means have the monopoly on this sentiment, we on these Benches believe that local services should be delivered at the most local level possible. Those of us who have served in local government in London must, I believe, regret that we do not have community councils here to replicate the good work carried on outside London by councils at that level.
I am not suggesting in the amendment that I have any doubts as to the standard of work which parishes and community councils taken overall are capable of achieving and indeed do achieve. However, making them as fully accountable as they should be, and as many of them would wish to be, to the democratic process seems to me to be a notion which I believe they might be quite open to adopt. I beg to move.
Lord McIntosh of Haringey: My name is attached to this amendment and, therefore, I rise to express my support for the noble Baroness. Having had some part in the drafting of the amendment, I am bound to say that I realise that the latter is defective. It was not our intention for the amendment to say that if a parish council wants to be excluded then it must be excluded. I am sure that the noble Baroness will agree with me on that issue. I apologise for that defect.
I am sorry if I bore the Committee, but I must say that, as president of the Association for Neighbourhood Councils, I am strongly in favour not only of having active parish and neighbourhood councils but also of them being accountable to their electors. The thrust of the amendment moved by the noble Baroness seems to me to be entirely right. We on these Benches support it.
6.30 p.m.
Earl Howe: The effect of Amendment No. 27 would be to exclude for all time parish and community councils from the performance indicator provisions of Clauses 1 to 3. The effect of Amendment No. 28 could be just the same: at the discretion of the councils themselves they would be excluded. As to paragraph (b) of Amendment No. 28, I should draw the
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Committee's attention to the fact that subsection (3) (b) of Clause 4 already enables the Secretary of State to distinguish different cases.
My right honourable friend the Secretary of State intends that parish and community councils should be left outside the scope of Clauses 1 to 3 for some time. He does not intend to extend those provisions to the smaller councils. However, the Committee is no doubt aware that the larger parish councils spend more than the smaller district councils and it would seem appropriate to bring such councils within the scope of the performance indicator provisions.
In order to bring in parish and community councils the Secretary of State would have to make an order under Clause 4(2). That procedure should be sufficient to ensure that an order could be debated, if it seemed inappropriate, on whatever grounds.
With that explanation of my right honourable friend's intentions, I would ask the noble Baroness to withdraw her amendment.
Baroness Hamwee: I shall ask the leave of the Committee to withdraw the amendment, but in doing so I should say that it is a subject to which we may wish to return and we may take a little longer to say in plain English what it is that we mean. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 28 not moved.]
Clause 4 agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 29:
After Clause 4, insert the following new clause:
("Complaints procedures
.—(1) The Commissioner for Local Administration shall agree with the local authority associations and such persons representative of consumers as appear to him to be concerned, a Code of Practice with respect to the establishment, implementation and publishing by local authorities of complaints procedures.
(2) Any local authority shall have regard to any code issued under subsection (1) above in establishing a complaints procedure as specified under this section.
(3) Any local authority shall monitor complaints received under a procedure established in accordance with this section and shall include a summary of the results in any annual report on its performance in relation to local standards issued to residents in its area.").
The noble Baroness said: So far we have had a series of amendments from this side of the Committee which have sought to increase the leverage that local electors have over their town, city and county halls. We have discussed, for example, an amendment, designed to provide better access to information which, alas, was not supported by the Government Benches. We have had an amendment to provide for annual elections which was also not supported by the Government Benches; and we have had an amendment designed to take account of the views of the users of services based on a survey. That also was not accepted by the Government Benches.
I shall try for a fourth time to increase the accountability of town, city and county halls to local people. I do so again in good faith and in the spirit of the Citizen's Charter by seeking to establish a proper complaints procedure which will help turn consumers

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into customers. It would empower those receiving the services to obtain a sensitive and effective response when they are dissatisfied with them.
I suggest two things. First, the Government's Citizen's Charter provides that:
"It is fundamental to the Citizen's Charter that all public services, including local authorities, should have clear and well-publicised complaints procedures".
That of course is entirely right, but at the moment the Bill makes no such provision.
The amendment seeks to ensure that there is a proper complaints procedure on the face of the Bill, one that is based on consultations with the ombudsman who has been talking to local government associations on the issue. Accepting the amendment would tap into a series of discussions currently under way and acceptable to all parties. The second purpose of the amendment is to ensure that any such complaints procedure is monitored as part of the Audit Commission's assessment of a local authority's meeting of its performance standards. It would align the ombudsman's complaints procedure with the Audit Commission's attempts to help local authorities monitor their standards of performance. It is more important because one presumes that some of the quality tests of performance that the Audit Commission will seek to apply to value-for-money criteria—for example, standards of refuse collection—may well embody a number of complaints that the local authority receives, as my noble friend Lord McIntosh of Haringey said earlier, from the public about missing collections, spilt rubbish or gates left open.
I have the confidence to move such an amendment because there are already good precedents in many local authorities. I am sure that the Committee is aware that many local authorities have a complaints procedure. Harlow, for example, has its own local ombudsman; Islington has a central complaints service in the chief executive's office; Norwich—my authority—has a complaints procedure under its senior solicitor; Leicester has a departmental complaints structure; and Basildon has a well-established and well-publicised complaints procedure in various local offices. Many voluntary organisations such as, for example, Age Concern in the advice arcade in Norwich, have developed a complaints procedure.
A good complaints procedure ensures that individual citizens and customers have their grievances addressed speedily, sensitively and flexibly and allows local authorities to monitor the quality of service delivered so that complaints can be looped back into the development of the quality of local authority services. I hope that the Committee will agree that the amendment is transparently virtuous and will support it. I beg to move.
Earl Howe: I certainly would not disagree with the general principle that local authorities should establish effective procedures to deal with complaints. Indeed the Commission for Local Administration has recently revised its guidance note for local authorities on the setting up of complaints procedures. Ministers have seen that commendable document on which the
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commission is now consulting the local authority associations. The final version will then act as an aide memoire for local authorities setting up their own system for handling complaints and a checklist for those whose system is already established.
The commission has reported a trend by local authorities towards instituting well-run complaints procedures, but how they do it must remain a matter for individual authorities. The whole thrust of the Bill is designed to see the people as customers. I cannot accept that the amendment, apart from being a bureaucratic way of setting about things, deals with complaints procedures in the right way. It amounts to interference with the independence of local authorities.
There are in any case technical faults in the amendment. It is all very well to encourage local authorities, the Commission for Local Administration and consumers' representatives to consult on a code of practice, but can the law demand that those bodies "shall agree" that code? I am more than doubtful that such a requirement would be enforceable. Furthermore, the Committee will note that there is no attempt to define "complaints" or "complaints procedures" in the clause.
Those are matters for which individual authorities must take responsibility. I therefore urge the Committee to reject the amendment.
Lord Stoddart of Swindon: I do not know about the technicalities of the amendment: it may well be that it is technically incorrect, but I should have thought that the Government would have welcomed the ideas behind it. However, it might sound bureaucratic to say to local authorities that they should ensure that their ratepayers, charge payers or poll tax payers—call them what we will—can make their views and complaints heard. I always remember Mr. Darlow, who was the town clerk—they were called town clerks then, and they were very good administrators—of Reading saying that the two most important members of his staff were the telephonist and the town hall doorkeeper because they were the people who had the first contact with the electors and the ratepayers. He always believed it was most important that the ratepayers should have a proper means by which they could express their views and particularly their complaints over the way the local authority was running the town's affairs.
I have to say that we did not have a formal complaints procedure, as is suggested here, and, frankly, I think the town would have been better run if we had had such a procedure. Indeed, had we been able to have guidance and to learn from other areas we might have been able to ensure that the ratepayers of Reading had a better service than they did have. Of course they certainly had a very good service, but there was not a formally laid down way by which ratepayers could get through to the chief officers or their various departments, and indeed very often they were not able to get through to their councillors either.
The range of services is so diverse and the importance of the services is such that there must be a way in which local people can feel part of the administration and not apart from it. All too often we

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hear people talk about "them"—meaning those in the town hall or in the civic offices—and all too often, when they feel abused by the decisions of the local authorities, they do not know where to go or how to complain. Certainly in the case of a large authority or of county-based authorities, where the administration may be very remote from the people the people feel completely frustrated and completely unable to make any impression at all on county hall and those who work there. I have had recent experiences of trying to get through to the highways department of Shire Hall in the county of Berkshire, but they simply will not listen and the reason is that they never hear you. You cannot get through to them. If there was a procedure whereby they had to listen, then ordinary people on the ground, the ratepayers who pay their salaries, would in fact be able to make their complaints heard; they would know how to do that. The local authority, too, would know that it had to respond.
Therefore I believe that the amendment which has been proposed by my noble friend, although it may be technically incorrect in some respects, has done a service by enabling us to discuss once again this problem of how people can make their voice heard, how they can get their complaint through to the people who can put the problem right, how we can make local government answerable to the people they are supposed to serve, and how local government can be made democratically accountable. Only in that way will local government become more efficient, which is what I believe we all want. As I have said, I hope the Government will consider what my noble friend has said, although I feel sure she will not press the amendment at this stage because it may be technically defective.
6.45 p.m.
Earl Howe: Perhaps I may just say to the noble Lord that I agree with the latter part of what he had to say, in that this amendment has provided a useful forum for discussing a most important subject. I did preface my remarks by saying that I fully accepted the general principle that proper and effective complaints procedures should be established by local authorities.
In practice, as we all know, most local authorities have informal complaints procedures which deal with the vast majority of shortcomings such as those mentioned just now by my noble friend Lady Oppenheim-Barnes. For formal complaints, the local government ombudsman is there as a long-stop. However, I feel that, in its general thrust, the amendment represents a bureaucratic overlay on what should be a natural procedure.
Baroness Hollis of Heigham: I thank the Minister for his charming reply. He offered three arguments for resisting the amendment: first, he believed that it would interfere with "the independence of local government"; secondly, that the complaints were difficult to define—I am not sure that he entirely convinced himself of his own argument on that—and, thirdly, that the amendment was defective. That point was picked up by my noble friend Lord Stoddart.
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On the point that it was bureaucratic and interfered with the independence of local government, I find this apparent switch of roles and the reversal of language really very curious. What we on this side of the Committee do not want is independence of local government from its citizens or its electors. We want to make local government more dependent on its citizens and its electors, more sensitive to them and more steered by them. We want to seek the independence of local government from the prescriptive, arrogant and uniform, to quote a phrase, of the Secretary of State. I think it is that which perhaps marks the difference between us.
The Minister said that complaints were difficult to define and went on to say that most local authorities had an informal complaints procedure. Above that, he said—and of course he was entirely right—there was the formal structure of the ombudsman. We are seeking to put what I might call a formal and bureaucratic complaints procedure below that of the ombudsman—formal and bureaucratic in the best sense and not the worst—meaning that the procedure is known, publicised, porous and get-at-able. The problem is that too often informal complaints procedures rely on whether a person has the confidence to come forward, whether they know a councillor who will help them to take up a complaint, whether a person happens to know an individual officer in the department concerned, or "knows their way around" and knows how to reach "them" inside the corporation, as mentioned by my noble friend.
Therefore we are seeking a known and formalised complaints procedure which the most anonymous person can use in order to have complaints registered. The Government's own Citizen's Charter says that it is fundamental that all public services, including local authorities, should have a clear and well publicised complaints procedure. If the Minister accepts that, how does he propose to translate that statement in the Citizen's Charter on to the face of the Bill, given that this Bill is meant to embody the Citizen's Charter? I ask him to tell us how he proposes to do that. Given that he has said he is sympathetic to the principle behind this amendment—and of course I accept what he says about the amendment being technically defective—can we count on the Minister's support in drafting another amendment which is not technically defective, which would translate the spirit of the Citizen's Charter on to the face of the Bill, and which all Members of your Lordships' Chamber would be invited to support?
Earl Howe: I do not think this a matter for the face of the Bill: that is the first point. The second point is, yes indeed, the Citizen's Charter is very strong on complaints procedures but, as I said in my initial response, the guidance note that the Commission for Local Administration has just produced will act as a very strong motivator indeed to local authorities. It is by that means that we intend to achieve the objective we all share.
Baroness Hollis of Heigham: I shall withdraw the amendment, but I may wish to return to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Duty to consider auditor's report or recommendation]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 30:
Page 5, line 12, at end insert:
("(1A) Before sending any report or document containing a written recommendation to which subsection (1) above applies, the auditor shall discuss with the body concerned which of the measures available to him would be most appropriate to be made applicable in the circumstances.").
The noble Baroness said: At the moment when an auditor's report is made to a local authority, the contents of that report are discussed in draft. That is quite right and sensible. As someone who has been at the receiving end of such discussions, I find that a useful and helpful exercise. The kind of report that the auditor can make can range from a qualification of the accounts to a report made in the public interest before the conclusion of an audit. It can be a report made in the public interest at the conclusion of an audit. It may take the form of a management letter or, least threatening of all, a conventional management letter about procedural arrangements. There is a variety or hierarchy of responses which the Audit Commission may make when responding to a local authority's accounts Its and when it seeks to suggest a change of practice.
The amendment acknowledges that the contents of the report are already discussed with a local authority but it seeks the support of the Government to suggest that the style in which an auditor brings forward his report should also be discussed. A council must discuss in public its response and it must publish that response. We are prescriptive about saying that the relevant meeting must be held within four months. We are also prescriptive about saying that a council must publish notice of that meeting. It must also publish the response once the outcome has been established.
A letter may be sent out that consists of a conventional management letter drawing attention to a changing pattern of rent arrears, for example. If a report in the public interest is being produced, it may be concerned with car parking moneys that have been handled less than fastidiously. If the report is a report made in the public interest during the process of an audit, it may concern a serious matter such as the Hammersmith and Fulham swaps, or it may, if they are worried about the financial arrangements for debt collection, be a qualified approval of accounts.
All those different styles of report send out different signals not just to a local authority but also to a local authority's electorate. That is quite correct. We are asking about the style that should be adopted. That affects the signals that are sent about about the gravity and nature of the auditor's response. Therefore we are asking that the style of the report should be first discussed with a local authority before the report is published in draft form. I do not believe the amendment compromises anyone's integrity but I believe it may aid clarity and mutual understanding. I beg to move.
Baroness Blatch: I can see that bodies which may be in receipt of a report or recommendation would like to
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influence the auditor as to the exact form in which he makes his views known to them. That is only natural, given that the procedural implications could be quite significant. However, I would ask the noble Baroness, Lady Hollis, to consider whether it is necessary to legislate for what, I am assured, already takes place in practice.
Under the legislation already on the statute book and under the Code of Audit Practice, auditors already have a number of options open to them: they can make a report in the public interest which may be either an immediate report or a report at the end of an audit; or they can make a recommendation. The Bill provides a further option; a recommendation requiring a formal response. I am convinced that we can leave matters, as now, to auditors guided by the Code of Audit Practice and, if it seemed that further guidance were needed, I am sure the Audit Commission (or Scottish Accounts Commission) would amend the Code of Audit Practice.
After consultation with local authorities, the style of a report should be a matter for the Audit Commission and not for the local authority. I hope that, on reflection, the noble Baroness will feel able to withdraw the amendment.
Baroness Hamwee: I support the thrust of the amendment. I hope the Minister will take account of the sentiments expressed here. I regret that I cannot give the Committee more detail on this matter than that contained in my notes, which tell me that the existing hierarchy of reports is contained in the Code of Audit Practice, which was approved by Parliament in November 1990. If further approval or amendment is required to that code of practice to incorporate provisions in the spirit of this amendment, I hope the Minister will consider that in a favourable light.
Baroness Blatch: The noble Baroness makes the point that it may well be timely for the Audit Commission to reconsider its code of practice in the light of the provisions of this Bill, if and when it reaches the statute book. The important point here is that it must be for the Audit Commission to determine how the report will be produced. It is not for a local authority to dictate in what form it should be produced. It is important that there is consultation with a local authority prior to a report being made.
Lord Stoddart of Swindon: I hope I have read Amendment No. 30 correctly. It states:
"Before sending any report or document containing a written recommendation to which subsection (1) above applies, the auditor shall discuss with the body concerned which of the measures available to him would be most appropriate to be made applicable in the circumstances".
I believe that the operative word in the amendment is "discuss". That measure would not give a local authority the right to dictate any provisions. All it gives the local authority is the right to engage in discussion about the most appropriate means by which the auditor's report is to be published and made available.
I thought the Minister was telling us earlier that she welcomed the widest possible range of discussion. I do not believe there is a wall between a district auditor

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and a local authority. I thought they were supposed to be working together—not against each other—for the benefit of ratepayers, chargepayers or poll tax payers. I do not know what we are supposed to call those people. In this amendment we are merely asking for a discussion on this matter. What is wrong with that? Why is the Minister resisting an amendment which is merely asking for a discussion of an auditor's report before anything is published? Will the Minister say what is wrong with my reading of the amendment?
Baroness Blatch: What is important is that the discussions that are relevant between the Audit Commission and the local authority concern the content of the report; in other words, what the Audit Commission is making a report on. It is important that that happens. However, the Audit Commission must be left free to determine for itself the way in which that report shall be published. That is the distinction we are making. It is not appropriate to state on the face of the Bill that that view should be influenced by the local authority as regards the style in which the report is produced rather than its content.
Lord Stoddart of Swindon: Bearing in mind that a local authority will know the local circumstances and the best way in which a document may be publicised, would it not be desirable for that local authority at least to be able to put forward a point of view? The amendment only seeks a discussion on this matter. In the final analysis, the decision is for the Audit Commission to make.
Baroness Hollis of Heigham: I am sure the noble Lord is entirely correct. I wish to make it clear that in no sense does the amendment seek to compromise the integrity of the Audit Commission or the auditor's findings on the performance of individual services within the local authority. Those of us who have been involved in local government, including the Minister, know that when local auditors, or the auditor from the Audit Commission, are concerned about a matter, whether it be rent arrears, debt collection, car parking or the cost of modernisation in a particular authority, they discuss those matters with the local authority to try to establish why the patterns of one authority are deviant—or apparently deviant—from the patterns they might expect. They might say they are concerned that management and supervision procedures are not stringent enough to produce good value for money.
We are seeking recognition that the form in which the auditors publish their reports is part of the message or content of what they are saying. They have discussed with us a certain area of anxiety. The form in which they express that anxiety reflects the degree of seriousness they attach to it. That is why we seek to bring the form of the Audit Commission's response, together with the content of the auditors' response, into the discussions between local authorities and their auditors.
The Minister referred to discussion between the Audit Commission and the authority. We are talking about independent auditors and local authorities on the one hand and auditors and the commission on the
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other. We seek to make it clear that the form in which auditors present their reports represents part of their statements concerning the seriousness of the contents of those reports and should be discussed with local authorities in precisely the same way as the contents of the draft report is currently discussed. That is why we have moved the amendment.
Baroness Blatch: I am grateful to the noble Baroness for giving way. I have been using the term Audit Commission where I ought to have referred to the local authority's auditor. Paragraph 8(d) refers to the duties of an auditor and states that the auditor must be concerned for action. That is important. It is the nature of the exercise. It continues:
"The auditor's work must be characterised by a constructive attitude. His or her aim must be to assist members of authorities and their officers, but the auditor must not hesitate to pursue conclusions even to the point of qualification of the report in the public interest where necessary".
I do not believe that there is a great deal between us. The debate is important, but it is about the nature and content of the report and the reason for the report as opposed to the independent right of the auditor to publish in the way he or she thinks fit.
Baroness Hollis of Heigham: At this time of night it is probably appropriate to withdraw the amendment. However, I believe that the Government are trying to make a distinction which is not appropriate. However, in deference I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astor: I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee stage should resume at 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Welsh Development Agency Bill
Brought from the Commons; read a first time, and to be printed.

Merchant Shipping (Prevention of Oil Pollution) (Amendment) Order 1991
7.2 p.m.
Earl Howe Earl Howe rose to move, That the draft order laid before the House on 4th November be approved [1st Report from the Joint Committee].
The noble Earl said: My Lords, the draft order was approved in another place on 21st November 1991. Before the enactment of the Environmental Protection Act 1990 it was not usually possible to serve a summons arising from an oil pollution incident on the foreign owner of a ship. As he is generally outwith the jurisdiction of our courts it has not been possible to prosecute him and compel him to appear to answer charges. Consequently any prosecution has had to be directed at the master of the ship. That is unsatisfactory because it has resulted in penalties which do not properly reflect the seriousness of the offence and serve as a deterrent to others.
During the passage of the Environmental Protection Bill last year a clause was added which enabled foreign owners to be prosecuted for pollution offences committed by their ships. The Act deals with that objective in two ways: first, by addressing pollution incidents in ports and harbours by amendment of the Prevention of Oil Pollution Act 1971, and, secondly, by allowing pollution incidents in United Kingdom waters to be similarly covered by an amendment to the Merchant Shipping (Prevention of Oil Pollution) Regulations 1983. The legislation dealing with ports and harbours has already come into force and it now remains to apply the provisions to offences committed within our territorial waters.
Under these amendments, a ship which has discharged oil into the waters of a port or harbour, or into the territorial seas of the United Kingdom, may be detained. It may be released on conclusion of the hearing and the payment of any penalties imposed or, in advance of the hearing, on the security of a bond of £55,000. A summons is deemed to have been properly served on the foreign owner of a ship if it is correctly served on the ship's master. The courts are already empowered to impose a penalty on a company which has been properly served with a summons even if it is not represented in court.
If any fine, costs or compensation ordered is not paid the ship may be sold to defray those charges. There are, of course, safeguards for the owner so that, for example, a ship must be released from its bond or detention if proceedings are not started within seven days. There is also provision to repay surplus funds remaining after any penalties, costs or compensation ordered have been paid. The court is also able to order that part or all of any fine imposed may be used to pay for the costs of cleaning up the pollution.
I commend the order to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 4th November be approved [1st Report from the Joint Committee]. —(Earl Howe.)
Lord Clinton-Davis: My Lords, I thank the Minister for explaining the order briefly. I should like to pose one or two questions. It is an order which we welcome wholeheartedly. It has emerged from a very complicated backcloth of legislation. As the noble Earl said, there were a number of very serious gaps in terms of the ability to prosecute the foreign owner of a vessel allegedly responsible for oil pollution offences. One aspect of those lacunae has been the difficulty in prosecuting foreign owners in practice.
The Environmental Protection Act 1990 provided considerable help in enforcing penalties which were prescribed by the Prevention of Oil Pollution Act 1986 and by amending the principle Act, the Prevention of Oil Pollution Act 1971. The provision that service on the master is proper service of proceedings on a foreign company as the owner of the vessel is desirable. So is the power to detain a vessel in certain circumstances and to confer powers on the harbour master to determine what security has to he provided.
A number of issues arise from the draft order, and I should like to concentrate on those. I have deliberately not mentioned all of the benefits which
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flow from the legislation which precedes the order and upon which it is based. The most important are the service of documents, the power to detain the vessel, enforcement against the vessel and a contribution to the cost of repairing the damage. That is action which the international community should have been working towards with greater vigour than has been the case. Nonetheless, progress is now being registered.
The service of documents is extremely important. Measures to enable enforcement of the pollution regulations against the owners of the vessel are necessary. One of the problems in the past, as I understand it—and perhaps the Minister will be able to confirm it—has been the fact that it has only been possible to enforce action against the master. In most circumstances that has resulted in a smaller fine than was appropriate for the offence being imposed, because Section 35 of the Magistrates' Courts Act 1980 requires the court to take into consideration the means of the accused. That has prevented full implementation of the Marpol requirement contained in Article 4(4) to the effect that the penalty specified under the law of the party pursuant to the convention shall be adequate in severity to discourage violations of the convention, which is in effect what the Minister said. In the case of John v. Wright, decided in 1980, a fine of £25,000 imposed on a master was held by the High Court of Justiciary to be harsh and oppressive and it was reduced to £750. If the court enforces against the owner, consideration of the means of the individual is less likely to restrict the award, so that is certainly to be welcomed.
As to the power to detain, there is a strong argument that the statutory limit of £50,000 for a summary fine should be replaced by a much higher limit in the circumstances that we are discussing, which are sui generis in a way and should therefore be treated separately, so that magistrates could impose a fine on an owner representing the true value of the loss or clean-up operations. In those circumstances, the vessel would not then be released until adequate security had been provided. Most cases will, after all, be dealt with by local magistrates in port areas who will have built up considerable expertise in that field and can be trusted to deal with the matter in a balanced way.
I pray in aid a similar argument to the next point; namely, the contribution to the cost of repairing the damage. Section 20(2) of the 1971 Act provides that the court may order the whole of part of a fine to be used to defray the expenses of making good the damage caused by the offence. It would be a good thing if that provision were reflected strongly in the regulations. The determination of the level of fine should be influenced by the cost of remedying the damage. Although I recognise that that involves an element of compensation, compensation is no longer unknown to the criminal law.
For those reasons, I do not think that the present limits represent the criterion that the Minister himself invoked; namely, that the fine should represent the severity of the offence or act as a deterrent to others. It is perfectly true that the Crown might decide to

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pursue the matter on indictment in the Crown Court. Perhaps the Minister will be able to tell us how many such cases have been dealt with in the Crown Court in the past year or so. Perhaps he will have to write to me about that matter unless help is available from some unknown quarter.
As I said, we welcome the fact that the Government have at long last moved against irresponsible owners, no longer confining their concentration to the acts of irresponsible masters and officers. That is right because owners rather than masters are responsible in so many ways for damage that is caused, whether to the environment or to life or limb. They are responsible for enabling geriatric ships to go to sea which should not be at sea at all and which might escape the rigours of port-state control. Owners rather than masters are responsible for poor crewing conditions, and owners as well as masters allow poor safety conditions to prevail on board. I hope and expect that, as a result of the regulations, a much more dynamic and effective series of actions will be taken to deal with those owners who, by what they do or often by what they do not do through inertia, should shoulder responsibility for acts of pollution, oil and chemical, as they have not done in the past.
It is extraordinary that in about the past six years some 1,136 incidents have been discovered of ships being in breach of regulations, yet only two prosecutions have resulted, one ship has been detained in port and one prohibition order or improvement notice issued. Why has there been such a poor record of prosecution? It is simply not enough to say, as the junior Minister did in another place on 21st November, that some of the 1,290 reported incidents that occurred between 1985 and recently have been small. I cannot accept that out of those 1,290 cases only two prosecutions should have resulted and the other consequences followed in two other cases. It is simply not good enough.
To achieve the purpose that the order sets out, I want to know from the Minister whether there is an adequate number of inspectors to ensure that the law is properly enforced. Will he tell us what is the number of inspectors available to deal with the matter? If there is an inadequate number, do the Government plan to recruit any more inspectors; and, if not, why not? Having raised those points, the Opposition wish to associate themselves with the purposes behind the order.
Earl Howe: My Lords, I am grateful to the noble Lord for his welcome of the measure. Perhaps I may take his points in turn, in so far as I am able at present.
The noble Lord mentioned first the difficulty in practice of prosecuting offenders and polluters. That is perfectly true. The difficulty is a practical one which surrounds obtaining adequate evidence to demonstrate that pollution has occurred. If a prosecution for an illegal operational discharge is to succeed, two forms of evidence may be presented. The first is to obtain a sample of the oil from both the vessel concerned and the polluted area so they can be analysed and shown to match. Alternatively, clear photographs of the area supported by a statement
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from the photographers, or ultraviolet or infra-red imagery can now be put to the court. At times, for obvious reasons, it may be difficult to obtain acceptable evidence.
The noble Lord said that there has been a poor record of prosecutions given that, as he rightly said, 1,290 reports of pollution have been made to the Marine Pollution Control Unit since January 1985. Admittedly, many of those incidents are minor, but the trend is not a healthy one. The reason for so few prosecutions is partly, as I said, the difficulty of obtaining evidence. The other reason is that often the pollution incident does not occur within our territorial waters. In those cases we refer the ship to the flag state under the oil pollution convention. Since January 1985, 49 foreign ships have been referred to flag states for alleged pollution offences in British territorial waters. Of those, 16 were fined in the flag states and the remainder were either found not guilty or there was insufficient evidence to instigate proceedings. Once again, it is a question of difficulty in obtaining evidence.
The noble Lord also mentioned the difficulty in the past of serving a writ on the master of the ship. He is right. For reasons that we can appreciate, the master of the ship is often of limited means and, on conviction, the courts are usually reluctant to impose a substantial penalty on him. That in turn does not persuade the owner of the ship to ensure that pollution of ports and harbours should be avoided. Often, even if a substantial fine is imposed, it is reduced on appeal, so that is one of the strongest reasons for introducing a measure of this nature.
The noble Lord went on to say that the magistrates should have powers to charge higher fines than the £50,000 which is the maximum fine that a magistrates' court can impose. It is possible for magistrates to refer cases of that kind to the Crown Court. They are triable either way. Nevertheless £50,000 is a very high amount for magistrates to impose as a fine. The problem usually is to get them to impose the maximum and not that the maximum is too low. Some offences relate to pollution and some to safety. For those offences where £50,000 can be imposed it is rare for the maximum to be imposed.
Lord Clinton-Davis: My Lords, I am grateful to the noble Earl for allowing me to intervene. Perhaps he will write to me on this matter. The point I made was not that the fine is inadequate in relation to the master, but in relation to the owner. A £50,000 fine on a master can be a heavy burden taking into account the means of the defendant. However, when we talk of the owner, we enter a totally different situation.
Perhaps the noble Earl will also comment on this point. It is difficult in the circumstances to order a trial on indictment. There are difficulties of getting people before the court. Will he be kind enough to write to me about the generality of the fining process in relation to the new ideas that the Government have generated in the order?
Earl Howe: My Lords, I shall certainly write to the noble Lord on the latter point. However, it is not the

77
intention of this measure to criminalise masters of ships The measure seeks to get behind the master to the owner.
The noble Lord asked how many cases there have been in our courts. Since January 1985 no UK ships have been prosecuted for pollution offences in UK territorial waters. Three UK ships have been prosecuted and fined for pollution offences outside UK waters. Unfortunately, no statistics are available to me on the prosecution of UK ships within UK ports and harbours.
The noble Lord asked about the number of inspectors. The percentage of PSC inspections carried out by the department surveyors has consistently exceeded the 25 per cent. level prescribed for visiting ships by the memorandum of understanding. In 1990 that percentage went up to 34.4 per cent. after falling slightly in the previous two years. During 1988 and 1989 a number of department marine surveyors reached retirement age and new personnel had to be recruited and trained. In addition, there was a change in emphasis from simple volume targets to a greater attention to the quality and thoroughness of each inspection. That change has helped to identify deficiencies which might otherwise have gone undetected. In addition, the department expects to reach international agreement shortly which will enable greater coverage of operational practices and procedures. Priority is already being given to those aspects of the inspection programme. I shall write to the noble Lord on the precise number of inspectors.
Lord Clinton-Davis: My Lords, again I am grateful to the Minister for allowing me to intervene. Perhaps when he writes to me he will indicate the numbers in each of the years over the past five years. Will he also indicate whether the Government propose to recruit more?
Earl Howe: My Lords, I shall be happy to do so. With that information, I trust that we may conclude the debate. I am grateful to the noble Lord. The thrust of the measure is to give the law some additional teeth. I hope, as I am sure does the noble Lord, that it will be successful in that respect. I commend the order.
On Question, Motion agreed to.

Building Societies Act 1986 (Modifications) (No. 2) Order 1991
7.25 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley) rose to move, That the draft order laid before the House on 22nd October be approved [1st Report from the Joint Committee].
The noble Lord said: My Lords, I beg to move that the Building Societies Act 1986 (Modifications) (No. 2) Order 1991 be approved. The purpose of the order is to amend the Building Societies Act 1986 in one respect to bring it into line with present company law.
Section 110 of the Building Societies Act makes void any provision in the rules of a building society or in any contract which exempts any director, other
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officer or auditor of a building society from liability to the society in respect of negligence and other defaults. It is very similar to Section 310 of the Companies Act 1985 but in present circumstances this can bear very heavily upon directors of building societies, as in the case of companies, and could well inhibit suitably qualified people from accepting appointment as building society directors.
The corresponding provision in the Companies Act 1985 was changed by the Companies Act 1989, Section 137, which permits companies to purchase and maintain insurance against the relevant liabilities for directors and auditors of companies and it was desired to make a similar change for building societies.
Section 104 of the Building Societies Act enables the Treasury by order to make modifications of certain provisions of the Act, called the relevant provisions, for the purpose of assimilating those provisions to corresponding provisions of the Companies Acts where those are modified by subsequent legislation. The relevant provisions, however, did not include Section 110 of the Building Societies Act, but that section has now been added to the relevant provisions in Section 104 by Section 211(1) of the Companies Act 1989, which has now been brought into force by the Companies Act 1989 (Commencement No. 12 and Transitional Provision) Order 1991. Accordingly the way is now clear, subject to approval of this Motion, for an order in the terms of the draft before the House to enable building societies to effect insurance to cover their directors against the heavy liabilities which they may incur by negligence or other forms of inadvertence in the same way as has been done for company directors. I commend the order to the House.
Moved, That the draft order laid before the House on 22nd October be approved. [1st Report from the Joint Committee] —(Lord Henley.)
Lord Graham of Edmonton: My Lords, my noble friend Lord Peston has spoken to me on the matter. Having studied the order with care, we on this side of the Chamber have no objection to it.
Lord Henley: My Lords, I am most grateful for the care which the noble Lords, Lord Graham and Lord Peston, have given to the order. I am glad that they welcome it. I commend it to the House.
On Question, Motion agreed to.
The Earl of Strathmore and Kinghorne: My Lords, I beg to move that the House do now adjourn during pleasure until eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.27 until 8 p.m.]

Local Government Bill [H.L.]
House again in Committee on Clause 5.
[Amendment No. 31 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 32:
Page 6, line 7, after ("above") insert:
("(aa) to any magistrates' court committee).
The noble Baroness said: I shall speak also to Amendment No. 33. Amendment No. 32 is modest and straightforward. There should be no difficulty in taking it on board. The Bill provides that auditor's reports be scrutinised by the council of the local authority. That is entirely right and correct. However, the issues which the auditor's report raises may, first, touch on the administration or personnel and financing of magistrates' courts, 25 per cent. of the costs of which come from local authorities. Secondly, they may touch equally on the competence and capacity of individual schools and FE colleges to handle their cash budgets under LMS. However, the Bill contains no provision for the magistrates' courts committees or the governors of local schools and FE colleges to consider an auditor's report which may directly affect them. Would it not be sensible that they too should receive and respond to the reports, especially if the reports are critical of their performance? We suggest that the discipline of receiving and discussing the auditor's reports should apply to all bodies under his purview. I beg to move.
Baroness Blatch: There is a good point underlying Amendment No. 32. Under the present law the Audit Commission has no right of access to the accounts of magistrates' courts committees, although its auditors as part of their routine work audit the accounts of local authorities, which in accordance with the Justices of the Peace Act 1979 are responsible for paying magistrates' courts committees' expenses. The position of magistrates' courts committees is therefore different from that of probation committees, which are within the value for money scrutiny of the Audit Commission and its auditors. It is not easy to see the reasons for this difference or why the magistrates' courts service should not have the full benefits of Audit Commission review and advice.
The difficulty with this amendment is that it would go too far in the other direction. It would equate magistrates' courts committees with local authorities even though probation committees are outside the scope of Clauses 5 and 6 of the Bill. The two committees have specialised management responsibilities and are not elected by the general public. As regards the independent and non-political administration of justice, there are good reasons why the normal requirements of accountability to local government electors, and hence the provision of Clauses 5 and 6, should not apply in that case.
There remains the question of whether the Audit Commission should have a greater role in relation to the magistrates' courts service than it now has. Members of the Committee will be aware that the Government have had under consideration for some time the recommendations of a scrutiny of the service to the effect that it should be reconstituted on a national basis as an executive agency of the Home Office. There have been extensive consultations on the scrutiny report with interested bodies and the Government hope to announce their conclusions shortly. The involvement of the Audit Commission is of course bound up with the outcome, which I cannot anticipate today. I should, however, like to take
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careful note of the points made by the noble Baroness and to draw them to the attention of my right honourable friend the Home Secretary with a view to considering the possibility of a government amendment at a later stage in relation to the remit of the Audit Commission in this area.
As regards Amendment No. 33, auditors' reports on local authorities may already cover schools and colleges. However, I think I understand what Members of the Committee opposite have in mind—that the local education authority will not be in a position to answer at open meetings for spending decisions taken in schools and colleges, because the discretion over that spending has been delegated to the governing bodies of those institutions.
But when it comes to matters of audit the duties of local authority chief finance officers are unchanged by local management. Schemes of local management specifically allow the chief finance officer access to any information in those institutions which is needed for audit purposes; and ultimately, if institutions fail to spend the money put at their discretion satisfactorily, the local education authority may withdraw delegation under the Education Reform Act. Consequently it is right to make the local authority answerable in open meetings for the probity of public funds spent in these institutions, just as elsewhere within the authority. The right way of so doing is through the mechanism set out in this Bill.
Perhaps I should say a few words about value for money rather than audit. Members of the Committee may be wondering how the local authority can properly comment on the value for money and the quality of service delivered in schools and colleges when the discretion over the spending decisions rests with the governors. The solution is that governors should be answerable for this—and that is just what we have already done. Under the Education (No.2) Act 1986, governors have to publish annual reports on their schools which, among other items, give details of how the schools' money is spent. The governors must then hold a public meeting for parents at which the report can be discussed. Before long, Members of the Committee will have the opportunity to debate a Bill, currently in another place, which reforms the arrangements for school inspections. School governors will have to publish inspection reports and will be held to account by parents and the local community for the quality of education which has been delivered in their school.
As regards colleges of further education, Members of the Committee will know that another Bill which is currently before this House takes these colleges out of the local authority sector and establishes them as independent institutions, funded by further education funding councils. The Further and Higher Education Bill provides for the quality of education provided in the colleges to be assessed and for the establishment of a quality assessment committee. We should leave the discussion on those detailed arrangements for the Committee stage on that Bill, which will begin shortly. I have no doubt that this Chamber will address them with its usual vigour. I hope that on that basis the noble Baroness will withdraw the amendment.
Baroness Hollis of Heigham: I thank the Minister for that helpful reply, in particular her response to the point about magistrates' courts. I hope that after consulting the legal draftsmen we can both return to the matter at a later stage. I take her point that perhaps a more appropriate way to deal with the LMS and FE colleges is in other education Bills. It is pleasant to acknowledge even so late in the day that we share the common perspective of making public moneys publicly accountable through the auditing procedure. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 33 and 34 not moved.]
Clause 5 agreed to.
Clause 6 agreed to.
Clause 7 [Publication of information by the Audit Commission]:
[Amendment Nos. 35 and 36 not moved.]
Clause 7 agreed to.
Clause 8 [Application of competitive tendering to professional services etc.]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 37:
Page 8, line 12, leave out from ("make") to second ("for") in line 24 and insert ("provision applicable on a common basis to any defined activity within the meaning of Part I of the 1988 Act").
The noble Lord said: With this amendment we come to the second part of Part I—Clauses 8 to 11, which are concerned with compulsory competitive tendering. I shall not repeat the arguments which we had on Second Reading and when we considered the instruction to the Committee about the propriety of including those clauses at all.
In speaking to this amendment I wish to concentrate on one aspect to which I referred in the debate on the Queen's Speech but which has not received much attention since; that is, the provision at the beginning of Clause 8 that:
"The Secretary of State may by order make such modifications of Part I of the 1988 Act … as he thinks fit",
for various purposes.
It seems to me that that is a classic example of an issue which has recently concerned Members of this Chamber; that is, what is called the Henry VIII provision. I am not sure why it is called that. Perhaps the noble and learned Lord, Lord Simon, will complete my extremely inadequate legal education on this matter. However, for me its impact is the power given to a Secretary of State by order, by secondary legislation, to amend primary legislation. Every time that that has been attempted, there has been forceful protest in this Chamber. There have been occasions when such a protest has resulted in action.
Clause 8(1) gives power by order to amend Part I of the Local Government Act as the Secretary of State thinks fit for the purpose of adding professional advice or services or other services to the list subject to compulsory competitive tendering under that Act. We cannot know, because it is left to secondary legislation, what services will be added even after the current consultation period which ends on 31st January 1992. In addition to the complaints which we have already made about the unsatisfactory nature of
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those four clauses and the fact that the consultation is simultaneous with, and will outlive, the consideration of the Bill in this Chamber, there is the additional objection that this clause gives the Secretary of State power by order to amend primary legislation.
We shall not be impressed by arguments that the powers given are relatively restricted. That is not the point. The point is that primary legislation should not be amended except by primary legislation. There should be no provision to make that possible.
Our amendment takes out from "make" in line 12 to the second "for" in line 24; that is, it takes out the part up to the introduction to Clause 8(2). In case there is any confusion about this, I should say that a later amendment, Amendment No. 83, purports to take out a section from the first "for" in line 24. That is a misprint. It is intended that it should be butted on to Amendment No. 37 and not to the first "for" in line 24. I believe that we tabled the amendment without realising to which "for" it was intended to apply. I apologise for that but when we reach Amendment No. 83 we shall see that it makes sense only if applied to the second "for" and not to the first "for".
The amendment takes out a part of Clause 8(1) and a part of Clause 8(2). However, it does not take out the whole purpose of Clause 8. It removes the parts which are most offensive to Parliament. It remodels the clause giving the effect that the Secretary of State still has powers by order to make provision but he can make common provision applicable to any existing service under the 1988 Act for the purpose of evaluating quality and financial terms.
I hope that that explanation is sufficiently clear to enable Members of the Committee to realise that this amendment addresses an extremely important issue in legislation. It is not a wrecking amendment. It leaves powers in the Bill which are consistent with existing legislation. If the Government are not satisfied with what is done in this amendment, they can bring back such amendments as they think fit at a later stage or in another place. However, it is vital that the Committee should now agree that Henry VIII legislation is not acceptable to this Chamber and must be resisted at all costs. I beg to move.
8.15 p.m.
Baroness Blatch: I must argue not only as regards the generality, because clearly it does not apply in every case, but if secondary legislation were not to be accepted in this Chamber, we should not be able to cope with the minutiae which would appear on the face of Bills. I believe that that is what the noble Lord said.
Lord McIntosh of Haringey: I never suggested that there should be no secondary legislation. No party which intends to take part in government could ever say that. I said that secondary legislation should not be allowed to amend primary legislation at the discretion of the Secretary of State.
Baroness Blatch: I assume that the intended effect of the amendment is to enable the Secretary of State to provide by order that CCT for the work already subject to CCT under the Local Government Act 1988

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should involve a two-stage tendering procedure in which the quality of tenders should be evaluated first and the evaluation of costs should take place subsequently.
It is important that quality should be safeguarded in the provision of services such as refuse collection and street cleaning which are already subject to CCT under the 1988 Act. There are many in local government who will readily agree that the identification and improvement of the quality of service provision has been one of the most significant results of CCT, because of the need for local authorities to prepare detailed specifications of the work involved as a basis for the tendering exercise. Research carried out for us by the Institute of Local Government Studies at Birmingham has shown that even as cost savings have come through from CCT so the standards of service have generally been upheld and, in some cases, raised. In the light of that experience, we see no need to import separate evaluation of quality and cost into the tendering procedures for the work already subject to CCT.
The quality of all services, whether manual or professional, is important. However, we recognise that the nature of the work carried out by professional employees is different from the manual services, not least because of the intellectual content of professional services. We have not said that we shall definitely specify a two-stage tendering procedure for all professional services subject to CCT. In our consultation paper we have said that we are prepared to consider modifying the existing CCT requirements in this way, but we intend to listen carefully to the points made by respondents to our paper before making up our minds.
As Members of the Committee have been reminded a number of times, both Houses will have an opportunity to decide whether or not they like the regulations when they are brought before Parliament. I ask the noble Lord to withdraw his amendment.
Lord Simon of Glaisdale: The noble Lord, Lord McIntosh, has clearly identified, having spotted it on Second Reading, a constitutional objection to the clause. With all respect, the noble Baroness has not met the point he made at all. As the noble Lord said, this is a Henry VIII provision. It is so called because it is a power similar to that given to Henry VIII by the Statute of Proclamations to amend by ministerial decree an Act of Parliament. That is what this provision does. That became a matter of contention between Parliament and the Executive for 150 years.
The right of Parliament to legislate was, in a famous phrase, the cause for which Hampden died in the field and Sidney on the scaffold. It was by their efforts and the efforts of others that the matter was resolved in favour of Parliament in 1688 and 1689.
For the best part of two centuries there was no further attempt by the Executive to usurp the function of Parliament and to govern by decree—ministerial order. It was tried again innocuously at the end of the 19th Century in an Act that will be well known to those noble Lords who are experts on local government. It was the Act which set up the county
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councils as the administrative governors of the counties in place of the justices sitting at Quarter Sessions. For that to be done there had to be elections to the county council and a date fixed for those elections. However, it was not certain whether the machinery would be ready in time. The Secretary of State, the Minister, was therefore given power to alter the date if it was inconvenient, indeed impossible, to carry through the machinery by the date specified in the Act of Parliament.
That is a good example of the circumstances in which a Henry VIII provision is excusable. It was not merely convenient to the Executive; it was necessary that the Secretary of State should be given that power. Inevitably, since such is the nature of power, to aggrandise power—that is the corrupting element in the exercise of power—what was used innocuously was afterwards used in a way that was open to objection.
Up till around 1930 and increasingly, the Henry VIII provision was inserted into Acts of Parliament to mounting alarm, so much so that at the beginning of the 1930s an extremely powerful committee—the Donoughmore Committee—was set up to review the whole question of delegated legislation. What it said in regard to the Henry VIII provision—calling it by that name—was that it was a serious inroad on parliamentary prerogatives: that it should be used only when it was not merely convenient but necessary. That was accepted. Until quite recently, from 1932 onwards, except for one isolated example at the beginning of the 1970s, there was no attempt to resuscitate this unconstitutional power.
Around five Sessions ago, simultaneously in one Session, in three Bills there were attempts to revive this ministerial power by decree; to amend, to terminate and to add to an Act of Parliament. It came under specific attention in the Children Act. It did so partly because a constitutional lawyer, the late Lord Elwyn-Jones, was leading in criticism of that measure and partly because my noble and learned friend the Lord Chancellor was in charge of it. My noble and learned friend was asked specifically on that occasion, and again in the following year in the passage of the Courts and Legal Services Bill, whether the Government accepted the recommendation of the Donoughmore Committee. He said that in general they did. He said that on more than one occasion.
The alarming point is that in the next Session his assurance was disregarded, and disregarded in a startling way. It occurred during the passage of the Statutory Sick Pay Bill. The Executive sought to take power to amend an Act of Parliament in such a way that it altered a fiscal charge on the individual citizen and thereby a charge on public funds. What is more, it made such decree only subject to the negative resolution procedure. That was objected to in the other place and the Government then undertook that it should be the affirmative resolution procedure. However, that was not good enough for your Lordships, quite rightly, as the watchdogs of the constitution. Your Lordships insisted, in a Division against the Government, in expunging that Henry

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VIII provision from the Statutory Sick Pay Bill. That was accepted and everybody hoped that it would be the end of that particular business.
However, it has again been sought recently to re-infiltrate those provisions. The noble Lord, Lord McIntosh, rightly said that it is narrowly defined in the Bill. That merely means that it can be easily amended—made the subject of amendment by primary legislation. There is no call for a Henry VIII provision at all. The noble Baroness, who has done so valiantly on the Bill, fortunately has an easy task in answering the points made on the provision; that is, to say that the provision is not merely convenient—of course it is convenient for the Executive—but that it is necessary, and why it is necessary.
I have no hesitation in supporting the noble Lord, Lord McIntosh. It seems to me to be a shameful thing that this matter should be debated late at night in an empty Chamber. That denies your Lordships your position as watchdogs of the constitution and detailed scrutineers of the Bills presented to Parliament. I therefore have no hesitation in supporting the amendment.
Baroness Blatch: It is with some trepidation that I rise to take issue with both the noble Lord, Lord McIntosh, and indeed the noble and learned Lord, Lord Simon of Glaisdale. The noble and learned Lord said that he saw no need for the provision and invited me to give good reason for the use of this specific power.
First, I do not accept that it is a Henry VIII provision. The provision cannot allow the Secretary of State to govern by decree, as the noble and learned Lord claims. Any order made under Clause 8 will be subject to the affirmative resolution procedure of both Houses. Furthermore, we set out clearly the outlines of how we propose to use the power in the consultation document.
It is known that the Secretary of State has the power vested in him by the 1988 Act to extend compulsory competitive tendering. However, given the extension to some of the more professional services that we have outlined during the course of today, it is necessary to provide regulations which recognise both the complexity of establishing tendering arrangements for professional services and the sensitivity of those services in such a way that allows more effective implementation of those measures. Without that power the Secretary of State would have the power to extend compulsory competitive tendering but he would be left with no mechanism—
Lord Simon of Glaisdale: Will the noble Baroness say what she means by flexibility in that connection?
Baroness Blatch: If one takes either architectural services, advice or legal advice and so forth, where competitive tendering applies, the Government have made it clear that there would be two considerations: one about the quality threshold for the services and another on cost. The consultation document is still very much in play. It is also possible that perhaps even accounting arrangements may have to be modified in
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such a way that makes sense of implementing those provisions. I am saying that merely having the power to extend to those areas leaves the Secretary of State with absolutely no flexibility other than the sort of crudity of power that he had to implement a straightforward service which does not require the more sensitive and real recognition of the complexity of some of the more professional services.
All we are asking in this part of the Bill is to acknowledge the Secretary of State's existing power vested in him by the 1988 Act to extend compulsory competitive tendering to other areas. Where those other areas require more complex arrangements for establishing tendering processes which make more sense and more effective implementation possible, then we shall need that flexibility. That is the intended use of it. It is well trailed in the documents and certainly in the consultation documents. There is really nothing more sinister in it than that. I ask for the Committee's understanding for what I believe is a degree of flexibility for sensible implementation of a policy.
8.30 p.m.
Lord McIntosh of Haringey: The Minister has given one reply which I expected. It is that the matter is not really all that important, which confirms the question put by the noble and learned Lord, Lord Simon of Glaisdale. If the matter is not all that important then it is certainly not necessary in the sense that exceptions to the Henry VIII provision should be permitted.
Baroness Blatch: I am grateful to the noble Lord for giving way. I hope that I did not imply that the matter was not important. I understand the import of taking a power which has the effect of modifying primary legislation in this way. I was saying that this degree of flexibility to bring about sensible implementation of this power is necessary. The case was made very eloquently by the noble and learned Lord, Lord Simon of Glaisdale. It was a very dramatic illustration of the worst abuse of that kind of power. I believe that I have set out good reasons for using it. It is only about a minor modification. I am not suggesting that it is not important.
Lord McIntosh of Haringey: I am grateful for that. I yield to the view of the noble and learned Lord, Lord Simon of Glaisdale, about the cases where there could be exceptions to the general prohibition of the Donoughmore Committee as regards Henry VIII legislation. In the Minister's reply I was surprised to hear that she sought to rely on two arguments to condone the use of Henry VIII legislation on this occasion. She said first that it was all right because there is an affirmative resolution in subsection (4). It is true that that literally comes back to Parliament. However, as is well known when resolutions come back to Parliament for approval they cannot be amended. It is a well-hallowed tradition in this Chamber with which I totally agree, that we should not actually vote against resolutions as regards this kind of secondary legislation.
The second argument that she used was even more surprising. She said that the Government had set out

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their position in the consultation paper. It is unfortunate to go back to that argument because it is, after all, only a consultation paper. It does not have even the status of the Government's response to the results of the consultation. As a consultation paper it has no force of any kind with which the Committee can be properly concerned. Therefore, on this single issue with which we are concerned on this occasion is it proper for the Bill to give powers to the Secretary of State to modify, amend, alter, extend or whatever the word may be, primary legislation in the 1988 Act? I believe that we must rely on the mature judgment of the noble and learned Lord. We must say no, that it is not proper and the Committee should agree to Amendment No. 37.
Baroness Hamwee: I have no wish to detain the Committee for more than one sentence. I support the amendment. I am extremely glad that it was the Minister and not I who followed the noble and learned Lord, Lord Simon. I could not possibly have emulated him. He gave me the key to what I want to say which is about the use of the term "flexibility". On a question of such constitutional importance it is a term which should make us all think extremely hard about what we are being asked to do. I support the amendment.
Lord Simon of Glaisdale: Perhaps I may intervene very shortly again. The noble Baroness's answer seems to me to be particularly dangerous. I can conceive of no circumstances where a complex situation cannot be spelt out where the use of the Henry VIII clause is not, on her argument, permissible. That is driving a coach and horses through the Donoughmore Report and my noble and learned friend's acceptance of it. Whatever happens I hope that the Committee will put on record that the justification for this unconstitutional power is not to be accepted for a moment.
Lord McIntosh of Haringey: I do not believe that I can add anything to that. The Committee should take a view on the matter.
The Deputy Chairman of Committees (The Viscount of Oxfuird): Before the Question is put I draw to the attention of the Committee that, should Amendment No. 37 be agreed to, I shall be unable to call Amendments Nos. 38 to 83 inclusive due to pre-emption.
Lord McIntosh of Haringey: Before the Deputy Chairman of Committees puts the Question I point out that I have indicated that there is an error in Amendment No. 83. I shall put down a manuscript amendment to that effect while the Division is taking place to make sure that Amendment No. 83 is not pre-empted by this amendment.
8.37 p.m.
On Question, Whether the said amendment (No. 37) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 55.

Division No. 3

CONTENTS

Addington, L.

Jenkins of Putney, L.

Airedale, L.

Judd, L.

Barnett, L.

Llewelyn-Davies of Hastoe, B.

Beaumont of Whitley, L.

McIntosh of Haringey, L.

Blackstone, B.

Mallalieu, B.

Brooks of Tremorfa, L.

Mayhew, L.

Carmichael of Kelvingrove, L.

Milner of Leeds, L.

Carter, L.

Morris of Castle Morris, L.

Cledwyn of Penrhos, L.

Mulley, L.

Clinton-Davis, L.

Nicol, B.

Dean of Beswick, L.

Peston, L.

Desai, L.

Ponsonby of Shulbrede, L.

Donaldson of Kingsbridge, L.

Rea, L.

Donoughue, L.

Richard, L.

Dormand of Easington, L.

Robson of Kiddington, B.

Falkland, V.

Rochester, L.

Foot, L.

Russell, E.

Gallacher, L.

Seear, B.

Galpern, L.

Sefton of Garston, L.

Graham of Edmonton, L. [Teller.]

Serota, B.

Shackleton, L.

Grey, E.

Shepherd, L.

Hampton, L.

Simon of Glaisdale, L.

Hamwee, B.

Stoddart of Swindon, L.

Harris of Greenwich, L.

Taylor of Blackburn, L.

Hilton of Eggardon, B.

Tordoff, L. [Teller.]

Hollick, L.

Turner of Camden, B.

Hollis of Heigham, B.

Whaddon, L.

Houghton of Sowerby, L.

White, B.

Howie of Troon, L.

Winstanley, L.

Irvine of Lairg, L.

Young of Dartington, L.

Jeger, B.

NOT-CONTENTS

Aldington, L.

Howe, E.

Annaly, L.

Lawrence, L.

Arran, E.

Long, V.

Astor, V.

Mills, V.

Balfour, E.

Monk Bretton, L.

Belstead, L.

Morris, L.

Blatch, B.

Napier and Ettrick, L.

Boardman, L.

Norrie, L.

Borthwick, L.

Oxfuird, V.

Brougham and Vaux, L.

Perry of Southwark, B.

Carnock, L.

Pym, L.

Carr of Hadley, L.

Reay, L.

Cavendish of Furness, L.

Rees, L.

Cranbrook, E.

Renton, L.

Cross, V.

Seccombe, B.

Cumberlege, B.

Shrewsbury, E.

Davidson, V. [Teller.]

Skelmersdale, L.

Denham, L.

Strange, B.

Denton of Wakefield, B.

Strathclyde, L.

Ferrers, E.

Strathmore and Kinghorne, E.

Flather, B.

Sudeley, L.

Fraser of Carmyllie, L.

Thomas of Gwydir, L.

Gray of Contin, L.

Torrington, V.

Harmar-Nicholls, L.

Ullswater, V.

Henley, L.

Vivian, L.

Hesketh, L. [Teller.]

Waddington, L.

Hives, L.

Wynford, L.

Hooper, B.

Resolved in the affirmative, and amendment agreed to accordingly.
8.47 p.m.
Lord Hesketh: On the basis of the Division that has just taken place, perhaps I may suggest that it would be a good idea if we adjourn the Committee for five minutes for the usual channels to discuss further proceedings in your Lordships' Committee this evening. On the basis of that, I beg to move that the Committee do adjourn for five minutes.
Moved, That the Committee do adjourn for five minutes—(Lord Hesketh.)
Baroness Seear: May I ask the noble Lord why he has moved the Motion?
Lord Hesketh: In answer to the question of the noble Baroness, it has been agreed by the usual channels, including her own party's Chief Whip, whose suggestion it was. On that basis, I hope that she will accept the Motion that I have just moved.
On Question, Motion agreed.
[The Sitting was suspended from 8.49 to 8.53 p.m.]
Lord Hesketh: In the light of fruitful and rewarding discussions through the usual channels—
Noble Lords: Oh!
Lord Hesketh: In the light of earlier agreements and understandings it has been decided that it would be better to complete our deliberations at this point. On that basis, I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Hesketh.)
Lord McIntosh of Haringey: Before the Question is put, the Government Chief Whip does not mean "complete our deliberations" but that he intends that the Committee should stand adjourned until tomorrow.
Lord Hesketh: When the Deputy Chairman has moved back to the Woolsack I shall of course attend to the adjournment. At the same time I accept entirely the remarks of the noble Lord, Lord McIntosh. I was foolhardy to refer to the entire Committee proceedings rather than to the part of it that has taken place this evening.
On Question, Motion agreed to.
House resumed.
House adjourned at four minutes before nine o'clock.